The US Trade Representative (USTR) yesterday released its proposed list of Chinese products that would be subject to a 25% tariff. The Federal Register notice confirms that USTR has found that China’s forced technology transfer policies are “unreasonable and discriminatory” under Section 301 of the Trade Act of 1974, an investigation that USTR initiated in August 2017.
The action further escalates trade tensions between China and the United States. The current dispute kicked off on 22 March when President Trump signed a Presidential Memorandum calling for tariffs on Chinese goods, as well as restrictions on Chinese investment in the United States and a new challenge to Chinese practices at the WTO.
The 1377 individual category of goods that would be subject to US tariffs span a range of industries. While the Trump Administration previously made clear that it would target high technology products and sectors supported by the “Made in China 2025” industrial strategy, only some consumer technology products made the final cut. These include some monitors, televisions, displays and their associated parts, some hard drives and memory devices, and computer parts. Most products tend to be intermediate goods, rather than finished goods, and most seriously impact sectors such as manufacturing, machinery, mining, and healthcare.
Despite the shock value, it could take some time before tariffs are imposed. The notice from USTR begins a consultation period that will last for nearly two months, including a public hearing on 15 May. While USTR could make a final determination of what goods to sanction as soon as late May, it could delay that decision until August 2018, and could delay applying those tariffs until February of 2018, if it so chooses. This legal flexibility will give the Trump administration the latitude to continue negotiating with China. Previous reports have indicated that the two governments are currently discussion possible trade concessions and expanded market access in order to avert a full-scale trade war.
As anticipated, Chinese officials have still reacted sternly. The Chinese embassy in Washington issued a statement shortly after the release: “Such unilateralistic and protectionist action has gravely violated fundamental principles and values of the WTO… It serves neither China’s interest, nor US interest, even less the interest of the global economy.” In Beijing, the Ministry of Commerce has stated that it “strongly condemns and firmly opposes” the proposed US tariffs and will… “soon take measure of equal intensity and scale against US goods.”
Further reading: US and China Inch Towards Trade War
Author: Logan Finucan