Date
16 July 2018
US Trade Representative Robert Lighthizer said the tariffs would target China’s high technology sector and could also include restrictions on Chinese investments in the United States. Photo: AFP
US Trade Representative Robert Lighthizer said the tariffs would target China’s high technology sector and could also include restrictions on Chinese investments in the United States. Photo: AFP

Trade war fears grow as US set to announce China tariffs

US President Donald Trump is scheduled to sign a memo at 12:30 p.m. EDT on Thursday (12:30 a.m. Friday in Hong Kong) imposing tariffs on Chinese imports in a move aimed at curbing theft of US technology, the White House said.

There was no indication of the size and the scope of tariffs, which US Trade Representative Robert Lighthizer said on Wednesday would target China’s high technology sector and which could also include restrictions on Chinese investments in the United States, Reuters reports. Other sectors like apparel could also be hit.

“Tomorrow the president will announce the actions he has decided to take based on USTR’s 301 investigation into China’s state-led, market-distorting efforts to force, pressure, and steal US technologies and intellectual property,” the official said.

The investigation under the Section 301 of the 1974 Trade Act has identified theft from and coercion of US companies to disclose their intellectual property as well as purchases by Chinese state funds of US companies for their technology knowledge.

Lighthizer told the House of Representatives Ways and Means Committee, a top economic body, that the aim would be to minimize the impact of any tariffs on US consumers.

China has threatened to retaliate by hitting US agricultural exports if tariffs on Chinese imports worth up to US$60 billion are announced by Washington.

“The remedies, in my judgment at least, would be one, doing something on the tariff front, and two, doing something on the investment front, and then perhaps other things,” Lighthizer, a lawyer and veteran trade negotiator, said.

The US runs a hefty trade deficit with China of US$375 billion, caused largely by its savings deficit and rising budget deficit. Estimates of the cost of counterfeit goods, pirated software, and theft of trade secrets and could be as high as US$600 billion, according to one influential study.

Talk of a global trade war emerged earlier this month when Trump announced hefty tariffs on steel and aluminum imports, aimed at hitting Chinese overproduction, but which also hit key allies like Canada, Mexico and the European Union.

Lighthizer conceded that China would likely hit back with measures on US agricultural exports, particularly soybeans, and said if that happened, Washington would impose “counter-measures”.

He acknowledged, though, that “nobody wins from a trade war”, a stance that appeared to put him at odds with Trump who has termed trade wars “good and easy to win”.

In Geneva, Switzerland, a World Trade Organization compliance panel ruled that the US did not fully comply with a 2014 ruling against its anti-subsidy tariffs on a range of Chinese products. Either side can appeal within 20 days.

China went to the WTO in 2012 to challenge US anti-subsidy tariffs on Chinese exports including solar panels, wind towers, steel cylinders and aluminum extrusions.

At the time it said its complaint covered an annual US$7.3 billion in exports to the US.

The WTO panel agreed that the US had not correctly used third country prices to assess the subsidies, but supported the US assertion that exporters were getting subsidies from Chinese “public bodies”, despite Beijing’s assertions to the contrary.

China’s commerce ministry said late on Wednesday that the WTO ruling showed that the US was a “repeat abuser” of trade remedy measures, and urged it to take immediate action to correct faulty practices.

If China’s complaint survives a potential appeal, it would move a step closer to retaliatory sanctions on US trade, although the two sides would first have to settle on the value of sanctions, which would involve a round of legal argument, Reuters said.

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CG

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