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Days after declaring trade war with China on hold, Trump administration revives threats of tariffs

Days after declaring trade war with China on hold, Trump administration revives threats of tariffs
Commerce Secretary Wilbur Ross, right, will travel to Beijing this weekend for trade talks. Treasury Secretary Steven T. Mnuchin, left, is preparing new investment restrictions on China. (Shawn Thew / REX/Shutterstock)

Only days after declaring a truce in a looming trade war with China, the Trump administration on Tuesday unsheathed its sword of tariffs again as it prepares to send another high-level delegation to Beijing for talks this weekend.

The administration has veered back and forth between conciliatory and antagonistic moves in its dealings with China, partly reflecting Trump’s negotiating style but also clashing views inside the White House and what many analysts see as a lack of a coherent strategy and clear set of goals on trade policy.

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A White House statement Tuesday said it would announce by June 15 a final list of $50 billion of Chinese imports that would be subject to 25% tariffs. The duties would target Chinese goods containing “industrially significant technology,” the statement said, and would be imposed “shortly thereafter.”

Additionally, the White House stated that by June 30 it would make public specific investment and related export-control measures aimed at restricting China’s access to important U.S. technology, and that these would take effect also soon after.

The proposed tariffs and investment restrictions have been in the works since earlier this year and are in response to the Trump administration’s findings that Chinese policies have pressured U.S. firms to give up their technology secrets to do business in China and that in some cases American firms have been victimized by outright theft of intellectual property.

A spokesperson for China’s Ministry of Commerce in Beijing expressed surprise at the White House statement, saying it was contrary to recent announcements by both sides after high-level talks in Washington earlier this month. Regardless, the spokesperson said, China has confidence that it would be able to defend the country’s core interests.

A little more than a week ago, Treasury Secretary Steven T. Mnuchin said that the planned tariffs would be suspended in the wake of China’s pledge to buy billions of dollars more of American products, specifically U.S. farm goods and energy resources such as liquefied natural gas.

Mnuchin’s public remarks May 20 that “we’re putting the trade war on hold,” plus Trump’s recent move to ease up on severe penalties against Chinese telecom giant ZTE, drew immediate fire from Trump’s supporters, who criticized the president for going back on his promise to get tough on China and bring real reform to trade policy.

It was unclear whether the White House issued the statement in response to the backlash, or meant to enhance its leverage in ongoing talks with a trading partner, a familiar tack by the administration. Commerce Secretary Wilbur Ross is scheduled to lead a delegation to Beijing for talks Saturday through Monday with a Chinese team headed by Vice Premier Liu He.

Others suspect the statement may be related to the ongoing talks with North Korea. Trump has blamed China for influencing Pyongyang to take a more hard-line stance toward the U.S. as Trump tries to hold a summit with Kim Jong Un on denuclearization.

Liu, Chinese President Xi Jinping’s top economic advisor, has met with senior Trump administration officials on three separate occasions since February as trade tensions began mounting this year. In early March, Trump announced tariffs on steel and aluminum from China and other countries, and a month later U.S. Trade Representative Robert Lighthizer released an initial list of hundreds of Chinese imports valued at nearly $50 billion that could be hit with 25% tariffs.

Dozens of U.S. firms and business groups, as well as lawmakers, have sought to restrain the White House from imposing massive tariffs that could trigger a trade war and end up hurting American consumers, companies and the broader economy.

“China’s trade practices raise serious concerns, but job-killing tariffs aren’t the answer,” Matthew Shay, president of the National Retail Federation, said shortly after the White House issued the statement.

Others pressing for significant tariffs against China argue that tough punitive action is needed to get China to change. But where most everybody agrees — hard-liners and those preferring a softer approach alike — is that the Trump administration has not articulated or implemented a unified strategy of what it wants from China and how it will achieve those goals.

Trump himself has made it a top priority to cut down the large U.S. trade deficit with China — about $375 billion in goods last year. But economists widely agree that U.S. trade deficits are the result of an imbalance between American savings and investment patterns. At the same time, some administration officials have put the focus on China’s domestic industrial policies and other mercantilist behavior.

“What you’re seeing is a back-and-forth because various people are looking at it from different perspectives and there’s no consistency,” said Yukon Huang, senior fellow in the Asia Program at the Carnegie Endowment for International Peace. “A lot of the focus is on technology transfer, so-called unfair competition, and those have to do with investment decisions and not really with trade.… [They’re] trying to reconcile this, and it’s chaotic because no one seems to know, and particularly at the president’s level, there isn’t any consistent signal.”

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Huang suggested it was hard to see how China would respond at this weekend’s meeting beyond the pledges it already has made to ramp up imports of U.S. goods to help lower the American trade deficit.

“It’s not simply a matter of blowing hot and cold from week to week, but there are serious internal contradictions in the Trump administration’s China trade policy,” said Alan Tonelson, the founder of RealityChek, a blog on economic and national security policy, and a longtime analyst on manufacturing and trade.

One of these problems, he said, is the administration’s apparent goal of breaking down various forms of discrimination and other tactics that the Chinese employ to make it easier for U.S. companies to do business in China. But some in Trump’s team don’t want American companies making more investments in China. “There’s a striking tension between that goal on one hand and greatly reducing the trade deficit on the other,” Tonelson said.

Peter Morici, a business professor at the University of Maryland and former chief economist at the U.S. International Trade Commission, argued that Tuesday’s statement from the White House wasn’t inconsistent with its earlier remarks that it was putting tariffs on hold.

“All they’re doing is cocking the trigger,” he said, noting that the administration needed to set the process in motion in case talks break down. The bigger problem, Morici said, is that there’s been a pattern in the administration of backing down when it counts.

“Donald Trump makes big bluffs but doesn’t follow through,” he said.

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3:50 p.m.: This story was updated with reaction from China and industry experts.

This story was originally published at 8 a.m.

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