US President Donald Trump could hit China with trade tariffs as early as Friday, sources say
Washington’s aggressive stance calls into question the future of talks between the world’s two biggest economies
This story is being published by the South China Morning Post as part of a content partnership with POLITICO. It was reported by Adam Behsudi and originally appeared on politico.com on June 12, 2018.
President Donald Trump is expected to impose tariffs on Chinese goods as soon as Friday or next week, according to two sources briefed on internal deliberations, a move that is sure to further inflame tensions and spark almost immediate retaliation from Beijing.
The administration on Friday is planning to publish a final list of Chinese goods that will take the hit.
The aggressive stance calls into question the future of talks between the two trade powers, which took a friendly turn in the weeks leading up to the North Korea summit as the U.S. sought China’s help. China was seen as playing a key role in getting North Korean leader Kim Jong Un to the table with Trump, who has consistently linked his trade demands to Beijing’s willingness to help on North Korea.
After the summit, Trump defended his personal friendship with Chinese President Xi Jinping and said he would call the Chinese leader, maybe on his way back to Washington. But he also said Beijing has not done an adequate job closing its border to trade with North Korea in recent months, which Trump seemed to blame for rising U.S.-China trade tensions.
“Which is a shame. But I have to do it. I have no choice. For our country, I have to do it,” Trump said at a press conference in Singapore, possibly referring to tariffs.
The trade talks had been most recently focused on China’s willingness to increase imports of the very goods it is likely to target for retaliation: U.S. aircraft, soybeans and other high-value exports.
“I came away thinking that he was suggesting in the press conference in Singapore that although Xi Jinping was a close friend [and] that he’d provided help on North Korea, that the president had no choice but to turn up the heat on China,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.
The new pressure also comes after the White House already made one major accommodation to China: backing off a seven-year ban on U.S. companies doing business with ZTE, a Chinese telecommunications giant that had been accused of sales to Iran in violation of sanctions.
Congress is already pushing back against that move, possibly complicating efforts to reach a deal with China. The Senate is expected to consider must-pass defense legislation this week that includes an amendment effectively rejecting the decision to roll back sanctions on ZTE.
Trump’s tariffs — as well as tough new investment restrictions and export controls that his administration plans to unveil by June 30 — are a response to an investigation in which the administration accused China of bolstering its own technological and economic development by forcefully transferring valuable technology owned by U.S. companies.
Peter Navarro, one of Trump’s senior trade advisers, said on Tuesday that the president is planning to impose tariffs on a “subset” of Chinese imports that the administration included in an original list of roughly $50 billion in targeted products in April.
Navarro’s comments suggest the Trump administration will move forward with tariffs but that it could impose penalties on a smaller group of products than those included on the original list of about 1,300.
After the public had a chance to weigh in, the original list is expected to remain largely intact but will be slightly reduced from what was first proposed, according to two sources briefed on the plans.
The administration is now considering a separate list of additional items that would be subject to more public input and on which tariffs could be imposed at a later date. That list would put more focus on items that China could promote for export in future years as part of its Made in China 2025 plan, sources said.
Semiconductors, which aren’t a big Chinese export to the U.S. and which were not included on the initial list, could be included, said one industry source.
On May 29, Trump ordered his administration to finalize the list of targeted goods that would be hit with a 25 percent tariff. The action appeared to be a clear statement that he wasn’t happy about the direction of talks with Beijing.
Commerce Secretary Wilbur Ross traveled to Beijing shortly afterward but failed to clinch any long-term deals for China to boost its imports of U.S. products. After the meeting, China warned that it wouldn’t buy more U.S. goods or take other measures to ease trade tensions if the U.S. followed through on plans to raise tariffs on Chinese imports.
“I think it’s very likely we will see tariffs. The administration has been moving forward, locked and loaded, so to speak,” said a source familiar with the talks.
But others say it’s still too soon to tell if Trump will move forward with actually imposing the penalties. Instead, he may choose to use the publication of the list on Friday as the latest shot across China’s bow.
“I see the sword being raised. I just don’t think there’s any indication about what would really make it drop,” said Kennedy of CSIS.
Trump could technically delay implementation of the tariffs until after the November elections if he thinks talks with China are making progress in addressing U.S. concerns about intellectual property theft, according to Bruce Hirsh, head of Tailwind Global Strategies, a trade advisory firm.
The authorizing statute for the tariffs, Section 301 of the 1974 Trade Act, allows the Office of the U.S. Trade Representative to take up to 30 days to put the duties in place after a formal determination is published in the Federal Register. So far, USTR has not published that determination.
In addition, Trump can delay the duties for a maximum of another 180 days if USTR determines that substantial progress is being made in the talks with China, or that a delay would help to bring about a satisfactory solution, said Hirsh, a former senior USTR official.
Doug Palmer contributed to this report.