Donald Trump’s US$50b tariffs target Beijing’s ‘Made in China 2025’ tech strategy

The list of items includes high-definition colour video monitors, electromagnets used in MRIs and aerospace parts as well as machinery used to make or process textiles

PUBLISHED : Wednesday, 04 April, 2018, 6:39am
UPDATED : Wednesday, 04 April, 2018, 7:15pm

Washington released a list of Chinese products representing about US$50 billion worth of annual imports to the US, which will be subject to punitive tariffs, a move that results from a US Trade Representative investigation into China’s trade practices.

The trade representative’s office said officials identified items that “benefit from Chinese industrial policies, including Made in China 2025,” referring to Beijing’s plan to dominate certain strategic technologies. 

Speaking shortly before the USTR announcement, US President Donald Trump reiterated his intention to address a bilateral trade imbalance that has grown steadily since Washington began integrating economically with China and supported Beijing’s accession to the World Trade Organisation in 2001.

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“We’ve helped rebuild China over the last 25 years, if you take a look at what’s happened. We have helped rebuild China,” Trump said before a working lunch at the White House. “So we intend to get along with China, but we have to do something very substantial about the trade deficit.”

The move drew immediate response from China’s US embassy in Washington, which promised to “take corresponding measures of equal scale and strength against US products in accordance with Chinese law”. 

The list, with 1,300 line items, covers a wide range of products, including high-definition colour video monitors, electromagnets used in MRIs and aerospace product parts as well as machinery used to make or process textiles, printed products and food.

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The US also picked products based on the principle of trying to minimise the effect on US consumers, the office said.

“The total value of imports subject to the tariff increase is commensurate with an economic analysis of the harm caused by China’s unreasonable technology transfer policies to the US economy, as covered by USTR’s Section 301 investigation,” the trade representative’s office said on Tuesday.

The list will be subject to 60 days of public review and comment before the tariffs take effect, and will be levied “in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises”.

In its response, the Chinese embassy in Washington said it “strongly condemns and firmly opposes the unfounded Section 301 investigation and the proposed list of products and tariff increases based on the investigation”. 

China ‘will give as good as it gets’ in trade war with US

The statement said the US government’s “unilateralistic and protectionist action” had “gravely violated fundamental principles and values” of the World Trade Organisation. 

“It serves neither China’s interest, nor US interest, even less the interest of the global economy,” the statement said. 

“As the Chinese saying goes, it is only polite to reciprocate.”

The embassy said China would resort to the WTO dispute settlement mechanism and “take corresponding measures of equal scale and strength against US products in accordance with Chinese law”. 

The announcement by the trade representative’s office is the latest step in an escalating trade war with Beijing that started when the body announced last month that it would levy punitive tariffs on all imports of steel and aluminium. 

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US Trade Representative Robert Lighthizer gave most US trading partners exemptions to that order, including South Korea. 

China, which did not get an exemption, imposed US$3 billion worth of tariffs on 128 US products, including fruit, wine and pork, as a response to the punitive action the trade representative’s office took on metal imports. 

Beijing is threatening a bigger response to the tariffs on goods the trade representative’s office itemised on Tuesday. 

The US Chamber of Commerce, the country’s largest industry association, responded quickly, urging caution. 

“The administration is rightly focused on restoring equity and fairness in our trade relationship with China,” said Myron Brilliant, the chamber’s executive vice president and head of international affairs. 

“However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends.” 

Brilliant said the US Chamber “looks forward to working with the administration throughout the comment period to make the business community’s voice heard on the US-China economic relationship”.

Xi’s economic team is well qualified to tackle trade war

The tariffs constitute the US administration’s sharpest response to China’s launch of its Made in China 2025 strategy. 

The policy, announced in 2015, highlighted 10 sectors for support on the way to China becoming an advanced manufacturing power: information technology, high-end machinery and robotics, aerospace, marine equipment and ships, advanced rail transport, new-energy vehicles, electric power, agricultural machinery, new materials and bio-medical. 

In addition, China has a separate development strategy for artificial intelligence, published in 2017.

“China, in my view, brazenly has released this China 2025 plan that basically told the rest of the world, ‘We’re going to dominate every single emerging industry of the future, and therefore your economies aren’t going to have a future,”’ White House trade adviser Peter Navarro told Bloomberg Television on March 28.

With additional reporting by Bloomberg