U.S. set to hit China with tariffs on $200-billion of goods in trade-war escalation

The Trump administration is preparing to impose tariffs on US$200-billion more in Chinese goods, a move that would intensify the bruising trade war between the world’s two largest economies.

U.S. Trade Representative Robert Lighthizer on Tuesday evening unveiled a proposed list of more than 6,000 products to be hit with 10-per-cent import taxes. President Donald Trump had ordered him last month to draw up the list in the event China retaliated against a previous round of U.S. tariffs.

Goods to be targeted range from chemicals and construction materials to fabric and buttons to handbags and food products to boats and air conditioners – a sweeping inventory that would inflict economic pain across China’s manufacturing sector while jacking up prices for U.S. businesses and consumers.

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The administration will consult on the products over the summer, and make a final decision on tariffs after Aug. 30.

The latest salvo is part of Mr. Trump’s multifront trade war, which has seen Washington take on its rivals and allies alike in a bid to fulfill the President’s promise of bringing manufacturing jobs back to the United States. But much of the President’s own base has been caught in the economic crossfire, raising questions about how much pain the country can take as Mr. Trump pursues his signature trade agenda.

Mr. Trump hit US$34-billion worth of Chinese imports with 25-per-cent tariffs starting last week, with another US$16-billion worth to be added shortly. These levies target sectors key to China’s industrial strategy, including computer hardware, railway equipment and aerospace manufacturing. They are meant to put pressure on China to stop stealing U.S. companies’ trade secrets and forcing them to hand over intellectual property to Chinese firms as a condition of doing business there.

Instead of giving in, however, China hit back with dollar-for-dollar retaliatory tariffs on U.S. products. The new round of tariffs is a retaliation against the retaliation.

“For many years, China has pursued abusive trading practices with regard to intellectual property and innovation,” Mr. Lighthizer said in a statement on Tuesday. “Rather than address our legitimate concerns, China has begun to retaliate against U.S. products.”

While China’s theft and coercion of intellectual property from foreign companies is a widely acknowledged problem, trade experts are largely skeptical of Mr. Trump’s strategy to deal with it through punitive tariffs.

Robert Holleyman, the U.S. official in charge of trade with Asia during former president Barack Obama’s second term, described the tariffs as “tax hikes on U.S. imports.”

“None of this has produced a dramatic change in other countries and has yielded further retaliation,” Mr. Holleyman wrote in an e-mail. “Reliance on more and more taxes as a means to drive change is a high-risk strategy with U.S. importers and exporters at the heart.”

Trump administration officials, for their part, argue that the Obama administration’s preferred methods for dealing with unfair trade practices – negotiations and litigation at the World Trade Organization – were ineffective, and it is time to take a harder line.

The fight with China comes as Mr. Trump is also locked in a trade war with Canada, Mexico, the European Union and other U.S. allies. The President imposed steel and aluminum tariffs on these countries, and has threatened to hit them with levies on imported cars and trucks. He is also renegotiating the North American free-trade agreement, demanding Canada and Mexico eliminate trade barriers for the United States while allowing Washington to erect more barriers of its own to Canadian and Mexican firms.

The President’s tariffs are already squeezing some U.S. firms, which have started to raise prices or lay off workers as a result. And China’s retaliation was targeted at soy farmers and others in the U.S. Republican heartland. These groups and their GOP members of Congress – previously broadly supportive of Mr. Trump – have begun agitating for the President to ease up in his trade war.

David Cohen, a political scientist at the University of Akron, said the pressure on Mr. Trump will mount as the economic pain spreads from affected companies to be more widely felt by consumers.

“Americans like cheap goods. There’s a reason they shop at Walmart. When they see their prices rise, they’re going to be shocked,” he said.

But whether any of this has any effect on the President is an open question: Mr. Trump’s own Republican Party widely disagrees with his protectionist attitude on trade, but has failed to change his mind.

“I’m not sure that Trump feels pressure. I’m not sure that he cares about members of Congress being angry at him, or what the rest of the Republican Party thinks,” Mr. Cohen said. “He just expects them to get in line behind whatever he wants.”