Not Taco Tuesday But Tariff Tuesday: White House Announces 25% Tariffs On Chinese Tech

The U.S. “will impose a 25 percent tariff on $50 billion of goods imported from China containing industrially significant technology, including…”

Fresh off the White House presses as Americans get back to work from taking the time to reflect on our fallen, the White House has come out swinging against China again (posted in its entirety):

YEARS OF UNFAIR TRADE PRACTICES: China has consistently taken advantage of the American economy with practices that undermine fair and reciprocal trade.

  • For many years, China has pursued industrial policies and unfair trade practices—including dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies—that champion Chinese firms and make it impossible for many United States firms to compete on a level playing field.
  • China’s industrial policies, such as its “Made in China 2025” plan, harm companies in the United States and around the world.
  • China imposes much higher tariffs on United States exports than the United States imposes on China.
    • China’s average tariff rate is nearly three times higher than the average United States rate.
    • Certain products are even more imbalanced, for instance the United States charges a 2.5 percent tariff on Chinese cars, while China currently maintains a 25 percent tariff on cars from the United States.
  • China has banned imports of United States agricultural products such as poultry, cutting off America’s ranchers and farmers from a major market for their goods.
  • China has dumped and unfairly subsidized a range of goods for the United States market, undermining America’s domestic industry.
    • In 2018 alone, the Trump Administration has found dumping or unfair subsidies on 13 different products, including steel wheels, cold-drawn mechanical tubing, tool chests and cabinets, forged steel fittings, aluminum foil, rubber bands, cast iron soil pipe and fittings, and large diameter welded pipe.
  • In January 2018, the Trump Administration found that China’s overproduction of steel and aluminum, and the resulting impact on global markets, is a circumstance that threatens to impair America’s national security.
  • The United States has run a trade in goods deficit with China for years, including a $375 billion deficit in 2017 alone.

UNDERMINING AMERICAN INNOVATION AND JOBS: China has aggressively sought to obtain technology from American companies and undermine American innovation and creativity.

  • The cost of China’s intellectual property theft costs United States innovators billions of dollars a year, and China accounts for 87 percent of counterfeit goods seized coming into the United States.
  • United States Trade Representative’s (USTR) Section 301 investigation identified four of China’s aggressive technology policies that put 44 million American technology jobs at risk:
    • Forced technology transfer;
    • Requiring licensing at less than economic value;
    • Chinese state-directed acquisition of sensitive United States technology for strategic purposes; and
    • Outright cyber theft.
  • China uses foreign ownership restrictions, administrative review, and licensing processes to force or pressure technology transfers from American companies.
    • China requires foreign companies that access their New Energy Vehicles market to transfer core technologies and disclose development and manufacturing technology.
    • China imposes contractual restrictions on the licensing of intellectual property and technology by foreign firms into China, but does not put the same restrictions on contracts between two Chinese enterprises.
  • China directs and facilitates investments in and acquisitions of United States companies to generate large-scale technology transfer.
  • China conducts and supports cyber intrusions into United States computer networks to gain access to valuable business information so Chinese companies can copy products.

STANDING UP TO CHINA’S UNFAIR TRADE PRACTICES: President Trump has taken long overdue action to finally address the source of the problem, China’s unfair trade practices that hurt America’s workers and our innovative industries.

  • In January 2018, the President announced his decision to provide safeguard relief to United States manufacturers injured by surging imports of washing machines and solar products.
    • This was the first use of Section 201 of the Trade Act of 1974 to impose tariffs in 16 years.
    • These actions responded to injurious trade practices by China and other countries, including attempts to avoid legally imposed antidumping and countervailing duties.
    • Following the decision, Whirlpool announced 200 new jobs in Ohio.
  • USTR and the Department of Commerce are working together to defend the right of the United States to continue treating China as a non-market economy in antidumping investigations until China makes the reforms it agreed to when it joined the World Trade Organization (WTO).
  • President Trump’s Administration has successfully litigated WTO disputes targeting unfair trade practices and upholding our right to enforce United States trade laws.
    • In February 2018, USTR won a WTO compliance challenge against China’s unfair antidumping and countervailing duties on United States poultry exports and China announced the termination of those duties.

PROTECTING AMERICAN INNOVATION AND CREATIVITY: President Trump has worked to defend America’s intellectual property and proprietary technology from theft and other threats.

  • In August 2017, the Administration initiated a Section 301 investigation into China’s practices related to forced technology transfer, unfair licensing, and intellectual property policies.
  • After USTR completed its Section 301 report in March 2018, the President directed the agencies to explore numerous actions to protect domestic technology and intellectual property.
  • Under President Trump’s leadership:
    • The United States will impose a 25 percent tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to the “Made in China 2025” program.  The final list of covered imports will be announced by June 15, 2018.
    • USTR will continue WTO dispute settlement against China originally initiated in March to address China’s discriminatory technology licensing requirements.
    • The United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology. The list of restrictions and controls will be announced by June 30, 2018.

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Alternative media take on the announcement, via Zero Hedge:

The news comes a day after Chinese and US representatives battled at the World Trade Organization over US President Donald Trump’s claim that China is stealing American technology. According to Chinese law, foreign firms hoping to do business in China often must partner with local firms, with whom they’re expected to share their technology. This practice has been going on for years. The US said Tuesday morning that it will continue “pursuing litigation” at the WTO, where it filed a complaint accusing China of improperly stealing technology, while China has filed a complaint of its own over US steel tariffs. Treasury Secretary Steven Mnuchin said earlier that the US and China had both put a hold on tariffs and agreed to a deal framework.

“This is not the rule of law. In fact, it is China’s laws themselves that enable this coercion,” U.S. Ambassador Dennis Shea told the World Trade Organization’s dispute settlement body, according to a copy of his remarks obtained by Reuters.

“Fundamentally, China has made the decision to engage in a systematic, state-directed, and non-market pursuit of other (WTO) members’ cutting-edge technology in service of China’s industrial policy.”

China has long denied that it requires these technology transfers.

“There is no forced technology transfer in China,” China’s Ambassador Zhang Xiangchen told the meeting, adding that the U.S. argument involved a “presumption of guilt.”

“But the fact is, nothing in these regulatory measures requires technology transfer from foreign companies.”

Legal experts say Washington needs the WTO’s backing before it can legally move forward with implementing the tariffs that it has threatened. According to WTO rules, any dispute not settled within 60 days must be adjudicated by a panel of experts.

US and China have been holding high-level talks about trade for the past several weeks, but it appears they’ve made little progress.

Unlike other trade news, the headlines didn’t have much of an impact on stocks, which already have enough to worry about today thanks to Italy…