The Finance 202: Trump itching for showdown with China on trade

Wednesday , March 14, 2018 - 6:50 AM

Tory Newmyer

(c) 2018, The Washington Post.

President Donald Trump - newly recommitted to his gut instincts - is priming for a trade showdown with China.

His administration is considering slapping tariffs on up to $60 billion of Chinese imports, focusing on the technology and telecommunications sectors, according to a Reuters report. Those could come as part of a broader package that includes limits on Chinese investment and visa restrictions on Chinese travelers, CNBC reports. And the president is encouraging his team to dial up the heat, telling his top trade negotiator in a meeting last week that a proposed $30 billion target was too meager, Politico reports: Top officials are rushing this week to assemble a plan for tariffs on more than 100 Chinese products.

Typical Trump-era provisos apply. Nothing’s done until it is officially done, and maybe not even then. The president rattled allies and markets this month when he announced global tariffs on steel and aluminum imports, then ratcheted them back by granting exemptions to Canada and Mexico while opening the door to further carve-outs.

But the Trump who fired Secretary of State Rex Tillerson via Twitter on Tuesday looks decreasingly inclined to heed his advisers’ attempts to rein him in. “Trump’s moves have shaken and alarmed a West Wing staff who fear the president has felt less restrained about acting on his whims amid the recent departures of several longtime aides, including communications director Hope Hicks and staff secretary Rob Porter,” The Washington Post’s David Nakamura and Damian Paletta write. “White House allies in Washington suggested that Trump has been liberated to manage his administration as he did his private business, making decisions that feel good in the moment because he believes in his ability to win - regardless of whether they are backed by rigorous analysis or supported by top advisers.”

Lashing out with new protectionist measures would scratch Trump’s long-running itch to confront U.S. trading partners, China prime among them. Some trade experts warn that the administration risks provoking an escalating, tit-for-tat cycle with China, which could retaliate by punishing American agricultural exports, such as soybeans. But Trump has been marginalizing those voices in his orbit.

Back in August, the president ordered U.S. Trade Representative Robert Lighthizer to probe Chinese violations of American intellectual property. “Beijing often requires foreign companies to surrender trade secrets in return for the right to operate in China, where rampant piracy of products including clothes and computer software has long bedeviled multinational corporations,” The Post’s David Lynch writes. Lighthizer has a year to assemble the report, “but his boss is impatient for action, and some trade analysts say they expect an announcement of new U.S. trade measures next week.”

Even free-trade skeptics are sounding concerns about the prospect of the Trump administration pursuing a go-it-alone strategy that bypasses the World Trade Organization. “It’s important to make a sincere effort to approach the thing multilaterally,” Clyde Prestowitz, president of the Economic Strategy Institute and a former Reagan administration trade official, tells me. “But I think we also need to make it clear to our trading friends and partners that if there can’t be a fair multilateral settlement that we would be prepared to move unilaterally.”


Sign up for e-mail news updates.