Trump’s decision to level tariffs on Chinese imports followed a seven-month investigation into the intellectual property theft, a longstanding point of dispute between US-China.
Even as US President Donald Trump announced US$ 50 billion of tariffs on Chinese steel and aluminum products in a move to punish China for its “unfair” trade practices; in a retaliatory counter move, China too disclosed its plan to impose tariffs on up to $3 billion of US imports. With this the already tense trade relations between the two biggest economies, plumbed another depth.
Trump’s decision to level tariffs on Chinese imports followed a seven-month investigation into the intellectual property theft, a longstanding point of dispute between US-China. US Trade Representative has been instructed by Trump to publish a proposed list of products and any tariff increases within a fortnight and pursue dispute settlement on China’s discriminatory technology licensing practices dispute settlement in the World Trade Organization.
Talking to reporters in The White House at the ceremony to sign the memorandums against the economic actions of China, Trump said that the move was “long in the making”. Trump highlighted the huge trade deficit with China which stands at a whopping USD 504 billion per annum, adding that some estimates even put it at USD 375 billion. “But anyway you look at it, it is the largest deficit of any country in the history of our world. It’s out of control,” he said.
Trump said he has asked China to reduce the trade deficit immediately by USD 100 billion. Pointing at the huge difference in the two countries trade policy, he said that China charging 25 per cent for a car to go in, and the US only two per cent for their car to come into the US, was not a good thing. “That’s how China rebuilt itself. The tremendous money that we’ve paid since the founding of the World Trade Organization, which has actually been a disaster for us. It’s been very unfair to us. The arbitrations are very unfair. The judging has been very unfair. And knowingly, we always have a minority, and it’s not fair,” he said. The presidential memorandum targets $60 billion in Chinese goods with tariffs, but only after a 30-day consultation period that starts once a list is published.
Trump accused China of indulging in huge intellectual property theft running into hundreds of billions of dollars annually. Trump said the US is dealing “seriously,” with the issue.
Meanwhile, the commerce ministry of China said in a statement on its website that it was considering a 15 percent tariff on US products including dried fruit, wine and steel pipes and a 25 percent tariff on pork products and recycled aluminium. On China’s list are 128 US products that could be targeted, unless the two countries reach an agreement on trade issues.
According to the statement of the commerce ministry, China would implement the measures in two stages: first the 15 percent tariff on 120 products including steel pipes and wine worth $977 million and later the higher 25 percent tariff on $1.99 billion of pork and aluminium.
The ministry warned of legal action under the framework of the World Trade Organization to maintain the stability of global trading rules. However, it hoped that the issue could be resolved through dialogue.
Beijing has sounded a warning to the US with its planned retaliation. Both sides for now seem to be holding off from starting a full-blown trade war.
Source: Financial Express