United States Warn China in Trade Fight
China is the first nation to threaten United States exports after Donald Trump placed a new tariff on Chinese goods. The U.S. President introduced the US-China trade plan which would impose a 10% tax on 1,300 types of items imported from China annually.
The article discusses the plan and some of the consequences of it if Washington decides to go ahead with this move. These consequences range from more expensive consumer goods for Americans and less ability for American companies in China, who are dependent on imports, to reduce costs in order to compete with foreign firms that source products from China without tariffs or tariffs as low as 2%.
On March 23rd, 2017, President Trump announced the United States-China trade plan which will impose a 10% tax on 1,300 types of items imported from China annually. Tariffs will also be imposed on goods from other countries as well. The U.S. government has planned this strategy to tackle Chinese trade practices that are creating adverse effects in the American market such as theft of intellectual property (IP) and the aforementioned extreme levels of subsidies from China to its industries pumping up the prices and reducing competition with foreign companies which then have difficulty competing in China with poorly subsidized American goods and services using higher input costs due to tariffs or taxes that foreign firms do not have to pay. The Trump plan is also to fight the abuse of import tariffs which are viewed as protectionism by the United States since these tariffs are put on imports to create desired outcomes such as increasing activity in domestic industries and saving jobs that would otherwise be lost or moving jobs abroad with cheaper labor.
On March 23rd of 2017, Donald J. Trump signed an executive order titled "Establishing a framework for the elimination of barriers and imposition of legitimate trade mitigation measures with respect to imports from China" announcing the United States-China trade plan which will impose a 10% tax on 1,300 types of items imported from China annually. This plan was previously announced in a white paper titled "US-China Joint Statement on Promoting Fair Trade and Investment". The plan also includes tariffs on a range of other items including intellectual property, services, and agriculture. It also mentions the option for the executive branch to designate any other goods as "non-FTA" under the WTO if it cannot negotiate improvements with China at lower rates on these items.
Once signed, President Trump is expected to issue an executive order detailing which items will be subject to tariffs and what tariffs will be imposed. The plan will be on hold until further details are finalized. The "Section 301" executive order is needed because the U.S. Trade Representative claims China is violating WTO rules and agreements through their practices and China has not responded to requests for negotiations in an attempt to resolve these problems which would allow the U.S. to reduce tariffs on goods from China while still protecting American IP from infringement by China.
Foreign businessmen are given 3 years to reduce their exposure in China or they will face a 25% tariff on goods exported to the United States from those companies after October 1, 2018. The plan gives foreign businessmen 3 years to liquidate their assets in China as it will allow them to take money from the country and start a new business in the United States to reduce the impact on U.S. businesses abroad. A 25% tariff will be levied on all goods imported from China as well for three years, starting October 1, 2018 unless China changes its policies according to US requirements or goes out of business.
The Trump administration seeks to hold China accountable for their unfair trade practices by imposing tariffs which would force Beijing to change these policies or collapse their economy and force them into changing what they are doing. China has been taking over American technology, land and businesses through their "Made in China 2025" plan which will make the nation self-sufficient in key areas of technology, manufacturing and goods that are essential to the country's economy such as super computers, large aircrafts and electronics. China is also using unfair trade practices to reduce its trade deficit with the U.S., which is good for China. The U.S.-China Joint Statement says that China will remove these unfair practices once the U.S. removes its tariffs on Chinese goods in a reciprocal action because the tariffs are designed to protect American IP, create jobs for Americans, or change Chinese policy or force them into economic collapse so they have no choice but to change their policies.
There are three proposed tariffs on goods from China. These are "Section 301" tariffs or duties placed on goods from China in response to unfair trade practices of the country and intellectual property theft. These tariffs will be put in place on June 15, 2017 at 25% after a grace period of two months. The second tariff is a rise in the 10% duty on $200 billion worth of Chinese goods that will go into effect in September 2018 at 15%, and the final one is a 25% import tax on $300 billion worth of Chinese goods that are currently subject to 10% taxes that will go into effect October 1st, 2018 after six months.
The U.S. has stated that these tariffs and duties will be implemented in response to China's unfair trade practices and intellectual property theft. These tariffs are expected to be highly controversial due to the level of impact they will have on the U.S. economy and Chinese economy as well, however, the Trump administration has claimed that many American companies operating in China will benefit from reduced competition from foreign companies who do not have the same costs imposed on them as the U.S.-China trade plan imposes, which means those affected by these tariffs may find other employment or possibly even start their own businesses instead of working for a Chinese company with higher input prices for materials or services. The United States has been losing over $500 billion per year to China's unfair trade practices and intellectual property theft from Chinese companies operating in the U.S., so the tariffs are expected to be popular, especially with unions and businesses that have been hurt by Chinese competition and unfair trade practices.
The Trump administration is targeting 3 categories of items imported from China at these higher rates:
A 25% tariff on all $300 billion worth of remaining imports from China will be enacted by October 1, 2018 unless China takes steps to change its policies or liquidates its business in the U.S. permanently.
Conclusion
In the final section of this report, a few final remarks and predictions will be made.
First, the Trump administration's trade plan is likely to have a very positive effect on both of the countries involved due to the fact that the United States was losing money each year due to Chinese unfair trade practices and intellectual property theft when they were not working for American companies. The tariffs were put in place so that U.S.-China trade can be normalized so that both countries can benefit from these two countries' economic growths and the decreasing number of violations in tariffs and violations coming about as a result of compliance by both parties.