Trump Launches $50bn in Tariffs, Says China is "Out of Control"
Following an intellectual property (IP) review, Trump Announces $50 billion in China Tariffs.
The US plans to impose roughly $50 billion in tariffs on Chinese goods and limit the country's investment activity in the US as payback for what it alleges is years of intellectual property theft.
The White House said it has prepared a list of more than 1,000 products that could be targeted by tariffs. Businesses will have the opportunity to comment before the final list goes into effect.
US Trade Deficit With China
"Out Of Control"
The Wall Street Journal reports U.S. to Apply Tariffs on About $60 Billion of Chinese Imports.
“It’s out of control,” said Mr. Trump, referring to the trade deficit with China.
The Trump administration complains that the Chinese use intimidation and subterfuge to acquire U.S. technology, put U.S. firms in China at a disadvantage through unfair licensing deals and siphon away U.S. jobs. Mr. Trump sees confrontation as the way to get results, feeling that past administrations haven’t been tough enough, said senior White House officials.
China contends it has improved its protection of intellectual property and that it is moving fast to further liberalize its economy. It also is putting together a package of retaliatory measures against U.S. tariffs.
The $50 billion figure equals about 10% of U.S. imports from China. U.S. officials said the amount is roughly equal to its calculations of annual lost earnings by U.S. companies in China as a result of forced joint ventures and technology transfers.
“Holding China accountable for refusing to follow global trading rules is important and necessary,” said a statement by National Retail Federation President Matthew Shay, “But instead, the tariffs proposed by the administration will punish ordinary Americans for China’s violations.”
One might think China has nothing to retaliate over, but think again as China Ratchets Up Rhetoric, Vowing Action Against U.S. Tariffs.
“China absolutely won’t sit back and allow its legitimate rights and interests to be harmed and will take all necessary measures to protect” them, a Commerce Ministry statement said. A Foreign Ministry spokeswoman criticized the White House’s rhetoric, particularly the labeling of Chinese trade practices as “economic aggression,” calling such remarks “irresponsible.”
“Upholding economic stability serves the interests of the two sides,” Chinese Foreign Ministry spokeswoman Hua Chunying told reporters at a routine media briefing.
“Everybody knows that when it comes to trade, absolute reciprocity is not possible,” Ms. Hua said. “The U.S. on the one hand requires China to buy its products. On the other hand, it refuses to allow China to buy what it wants to buy from the U.S. Is this fair?”
A World Trade Organization ruling on Wednesday further fueled tensions. In the ruling, the global trade body largely sided with China’s complaint against the U.S. for slapping tariffs on Chinese solar panels, kitchen shelves and other products.
U.S. Trade Representative Robert Lighthizer told members of Congress on Wednesday that the WTO has proven “wholly inadequate” in dealing with China’s state-driven economy.
The US wants to "payback" China and China wants to "payback" the US.
The WTO agreed with China on solar panels, and so do I. More importantly, it's idiotic to turn away free goods.
On Cafe Hayek, Don Boudreax sums things up nicely with a parable:
A protectionist is someone who upon learning that god dispensed manna from heaven to the Israelites (as they wandered in the desert after their exodus from Egypt), concludes that god must have been mighty angry at his chosen people. After all, only a god furious at his people would punish them by “dumping” on them nutritious and tasty food at a price – zero! – far below that at which Israelite hunters, gatherers, or farmers could profitably compete.
Definition of Winning
Eurointelligence founder Wolfgang Münchau believes as Trump does, that Trade wars are winnable.
These people must have curious definitions of winning.
- Upon "winning" US citizens will pay more for goods and services.
- US manufacturers will pay more for steel and other imports.
- There can be no free manna from heaven.
Apparently "winning" means hurting others more than they hurt you.
After all, We Must Destroy Free Trade to Have Free Trade.
Mike "Mish" Shedlock