Trump continues to put pressure on China to lift its trade barriers
Late Monday, President Donald Trump announced tariffs on “roughly $200 billion of imports from China.” These tariffs are on top of the ones imposed this summer on $50 billion of products from that country.If China attacks US companies operating in China those companies can move operations elsewhere. Japan and South Korea have already done so and Trump is pushing to have US companies bring the manufacturing back to the US. China needs a deal and it is going to have to drop its protectionist policies and treat US companies fairly to get it.
The new round of tariffs go into effect September 24 at the 10 percent rate. The rate jumps to 25 percent on January 1, 2019.
The latest round of tariffs took observers by surprise. Many thought Trump would not impose the second round of tariffs until after a Chinese delegation concluded negotiations in Washington, scheduled for September 27 and 28, or until after the November midterm elections, especially because Beijing recently issued threats.
Monday, therefore, was a great day for the United States. After the Chinese had threatened, Trump called their bluff. Now, all their next moves hurt them more than they hurt America.
There must be consternation in Beijing because the Chinese have not seen, since Nixon, an American leader who has opposed them across the board. To prevent a new round of tariffs, an unnamed “senior official who advises the leadership on foreign policy matters” over the weekend dropped hints that, if the White House went ahead with the tariffs, China would not send representatives to Washington for the planned late-September meeting.
Furthermore, Chinese officials like Lou Jiwei, the head of China’s social security fund, also threatened not to sell components to American manufacturing companies in the country. Lou’s threat echoed that of Chinese officials who specifically suggested Beijing would not permit component sales to those manufacturing for Apple.
The threats against Apple this month followed China’s extortionate demands on the company in August.
In the past, threats like these would work against American presidents. For four decades, Washington policymakers thought the United States should support China’s Communist Party.
Trump, however, has a different perspective. His concern about China’s trade predation has been the one constant theme of decades of his thinking, so Beijing’s two threats did not work this time.
Trump had every reason to ignore them. First, he has consistently believed that Beijing needed America far more than America needed China, largely because China is the country running large trade surpluses. Last year, China’s merchandise trade surplus against the United States hit a record $375.6 billion. As Trump knows, trade-surplus countries get mauled in “trade wars.” Therefore, Beijing, not Washington, is the party that needs to talk to reduce tension.