Trump Hits China With Tariffs and Investment Restrictions

The punitive measures include $60 billion worth of annual tariffs on Chinese imports, said Trump
March 22, 2018 Updated: March 22, 2018    

WASHINGTON—President Donald Trump is taking measures against China to crack down on decades-long unfair trade practices that cost the U.S. economy billions of dollars.

Trump signed a Presidential Memorandum on March 22, directing the U.S. Trade Representative (USTR) and the Department of Treasury to take actions based on the findings of the 301 investigation, which concluded that China had been unfairly acquiring U.S. intellectual property for decades.

“We’ve spoken to China and we’re in the midst of a very large negotiation. We’ll see where it takes us. But in the meantime we’re sending a Section 301 action,” said Trump before signing the memorandum.

Trump orders the USTR to publish a proposed list of products and any intended tariff increases within 15 days of the signing of the memorandum. He also directs the Treasury Secretary to identify types of investment restrictions that will be imposed on Chinese companies investing in the United States.

The new tariffs on Chinese imports could be about $60 billion annually, according to Trump. And that is just a fraction of the problem, he said.

He pointed to the nation’s $375 billion trade deficit with China, adding: “It is the largest deficit of any country in the history of our world. It’s out of control.”

“We have a tremendous intellectual property theft situation going on, which likewise is hundreds of billions of dollars. And that’s on a yearly basis,” he said.

The tariffs won’t be imposed immediately. U.S. industries will be given an opportunity to comment on the proposed tariffs. Their input will be taken into account before the final tariffs are put into place, according to the White House.

The value of tariffs has been calculated based on the harm caused in particular by the Chinese regime’s practice of forced technology transfer, said Trump’s senior trade adviser Peter Navarro, during a call with reporters.

“What the United States is doing is simply strategically defending itself against this particular form of economic aggression,” he said.

The restrictions on the Chinese investment in the United States will go beyond the mandate of the Committee on Foreign Investment in the United States (CFIUS), which is an inter-agency committee that reviews the national security implications of foreign investments in the country.

The memorandum directs “the Secretary of Treasury within 60 days to propose an executive branch action beyond those embedded within CFIUS to address concerns about unfair acquisitions or investments in the United States that is directed or facilitated by China in industries or technologies that are strategically important to the United States,” said Everett Eissenstat, deputy director of the National Economic Council during the call with reporters.

“The [USTR] report itself clearly demonstrates that there is an unfair practice by China particularly as it relates to their efforts to acquire U.S. technology and to favor Chinese companies over U.S. companies,” he said.

In August last year, Trump signed a memorandum to tackle China’s trade practices with regard to the theft and forced transfer of American intellectual property. The memorandum ordered U.S. Trade Representative Robert Lighthizer to examine China’s trade practices.

As a result of this investigation, the Trump administration is now taking a tougher stance on the Chinese regime’s protectionist policies.

Navarro said the punitive measures would mainly target 10 key industries of the future such as artificial intelligence, robotics, and quantum computing, which were identified in Beijing’s “Made in China 2025” blueprint.

“Technology is probably the most important part of our economy,” said Lighthizer at the signing of the memorandum. “There are 44 million people who work in high-technology areas. No country has as much technology-intensive industry as the United States.”

Chinese Trade Policies and IP Theft

For decades, the Chinese regime’s protectionist and trade-distorting policies have weakened the competitiveness of American companies.

According to the IP Commission report by the National Bureau of Asian Research, the annual cost of IP theft to the U.S. economy could be as high as $600 billion.

And China is the world’s top IP infringer, responsible for between 50 percent and 80 percent of all IP theft costs, according to the IP Commission’s estimates.

China uses many tactics to steal information, such as forcing foreign companies to partner with domestic firms and hand over their technology and know-how to gain access to the Chinese market. Companies are also asked to relocate their production, research and development, and data storage to the country.

China has also gained illegal access to the computer networks of U.S. businesses and has often stolen their commercial information, according to the White House.

A previous Epoch Times investigative report revealed how the Chinese regime is stealing IP from American companies and universities, and selling the products made with the stolen innovations back to the United States at largely reduced prices.

Unilateral Action

The U.S. government could have resorted to using World Trade Organization (WTO) rules to deal with the issue. Instead, it has chosen unilateral action by invoking Section 301 of the U.S. Trade Act of 1974 to authorize the U.S. trade representative to begin an investigation of IP theft by China.

“The White House is frustrated by the slow pace of the WTO,” Scott Kennedy, deputy director of the Center for Strategic and International Studies, said in an interview last year.

Therefore, the U.S. government is resorting to unilateral action to move the process along more quickly and get results in time that are beneficial for American industry, he said.

The Trump administration thinks that other countries, mainly Japan and the European Union, will support U.S. efforts on tackling Chinese economic aggression.

“We suspect there will be others who will find this action to be good in leading and showing that we can take action to drive necessary change for the world economy,” a senior White House official said.

“We’re doing things for this country that should have been done for many many years. We’ve had this abuse by many other countries and groups of countries that were put together in order to take advantage of the United States,” Trump said.

“It’s probably one of the reasons I was elected, maybe one of the main reasons. But we’re not going to let that happen.”

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