politics

Trump Set To Announce China Tariffs On Thursday, Trade War Fears Grow

President Donald Trump will announce tariffs on Chinese imports on Thursday, a White House official said, in a move aimed at curbing theft of U.S. technology and likely to trigger retaliation from Beijing and stoke fears of a global trade war.

Trump-china-tariffs

There was no indication of the size and scope of the tariffs, which U.S. Trade Representative Robert Lighthizer said on Wednesday would target China’s high-technology sector and could also include restrictions on Chinese investments in the United States. 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 U.S. technologies and intellectual property,” the official said

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

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

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

China's President Xi Jinping and U.S. President Donald Trump witness U.S. and Chinese business leaders signing trade deals at the Great Hall of the People in Beijing

“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,” said Lighthizer, a lawyer, and veteran trade negotiator.

The United States runs a hefty goods trade deficit with China of $375 billion. Estimates of the cost of counterfeit goods, pirated software and theft of trade secrets could be as high as $600 billion, according to one 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 could also affect key allies like members of the European Union.

China Steels Itself For Response

China has already identified agriculture as a U.S. weak point and has said it would target soybeans, a $14 billion-a-year business. America’s farm states heavily backed Trump in his presidential election win.

“China does not want to fight a trade war with anyone. But if anyone forces us to fight one, we will neither be scared nor hide,” Foreign Ministry spokeswoman Hua Chunying said.

A global trade war would have much harsher economic consequences, possibly hitting the dollar, U.S. stock markets, and currencies as varied as the Mexican peso and the Australian dollar, according to analysis from investment bank Morgan Stanley.

The risk of an escalation in which there was a broad-based tariff across a range of Chinese goods followed by a response from Beijing that was commensurate with that would cause a hit to the U.S. and Chinese growth, a rise in U.S. inflation and possibly prompt China to take domestic action to boost growth.

Source: REUTERS

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