Geneva: The Donald Trump administration is preparing grounds for an all-out trade war with China by slapping unilateral crowbar tariffs on more than $500 billion of Chinese goods despite mounting opposition from American companies, analysts said. US President Donald Trump on Friday signalled his intention to impose tariffs on additional $267 billion, in addition to the proposed 25% duty to be levied on $200 billion of Chinese goods. “The $200 billion we’re talking about could take place very soon, depending what happens with them. To a certain extent, it’s going to be up to China," President Trump told reporters on Air Force One.
The US has already imposed additional tariffs of 25% on $50 billion of Chinese goods on 23 August under Section 301 on grounds of alleged theft of American intellectual property rights and forced transfer of technology from US companies by China. With additional tariffs on the proposed $200 billion Chinese goods, the total IPR (intellectual property rights)-related tariffs on Chinese goods will go up to $250 billion.
The administration is currently struggling to finalize the list of Chinese goods of $200 billion that would be subjected with additional tariffs because of opposition from American businesses.
Many US companies making bicycles to laptops and mobile phones, including Apple Inc., are seeking exemptions from the proposed tariffs on $200 billion Chinese goods, while cautioning that the tariffs will adversely hit America’s economic interests.
In a joint letter issued to the US Trade Representative ambassador Robert Lighthizer last week, many US business and industry lobby groups warned that “continuing the tit-for-tat tariff escalation with China only serves to expand the harm to more US economic interests, including farmers, families, business and workers." “Unilaterally imposing tariffs on hundreds of billions of dollars in goods invites retaliation and has not resulted in meaningful negotiations and concessions," they warned, Financial Times reported on 7 September.
But President Trump and China hawks in his administration such as Peter Kent Navarro, director of White House National Trade Council, and USTR ambassador Lighthizer reckon their actions against China are essential to stop China in its tracks from causing damage to the future of American high-tech industries. “I hate to say that (the proposed 25% tariffs on $200 billion Chinese goods), there is another $267 billion ready to go on short notice if I want. That totally changes the equation," the President said on Friday. “I’m being strong on China because I have to be," Trump said.
In response to American actions, China chose to retaliate against what it called the unilateral actions of the Trump administration on a balanced and measure-for-measure basis. Until now, China has hit back with retaliatory tariffs on a vast range of American products, including soybeans and beef, against each American action that began with solar panels and large residential washing machines followed by steel and aluminium and now IPR-related tariffs.
Significantly, Trump left none of his close trade allies such as Mexico, Canada, the European Union (EU) and Japan in doubt that he is going to retaliate against them if they fail to satisfy US trade concerns. EU has not only provided additional market access for American agricultural products but is also willing to consider bringing its auto tariffs, particularly on cars, to zero.
Canada is waging a grim rearguard battle in ongoing negotiations to revamp the North American Free Trade Agreement (NAFTA) to ensure its core concerns for preserving Chapter 19 binding dispute resolution mechanism, the dairy management board, and existing intellectual property protections for new drugs called biologics. It remains to be seen whether Canada’s prime minister Justin Trudeau who said a no deal is better than a bad deal with the US in the NAFTA-revamp negotiations will be able to safeguard his country’s interests.
Japan, which is hit with steel and aluminium duties, is watching what President Trump would do on auto tariffs under the Section 232 national security provisions. “If the Trump administration goes ahead to impose additional tariffs on cars and other auto products, Japan will retaliate," said a trade official from Japan, who asked not to be identified.
Notwithstanding Trump’s trade war with China, the EU, Japan, Canada, and other western countries are eager to make a joint alliance with the US for crafting new trade disciplines and rules to stop China from providing subsidies and other supports to its industry even under legitimate World Trade Organization rules.