The Trump administration said on Tuesday it would hit China with 25 per cent tariffs on some 1,300 industrial technology, transport and medical products as part of its drive to force changes in Beijing’s intellectual property practices.
The U.S. Trade Representative’s (USTR) office unveiled a list of mainly non-consumer products representing about $50 billion US of annual imports that would nonetheless hit supply chains for many manufacturers.
The list ranges from chemicals to light-emitting diodes, motorcycles and dental devices.
Publication of the tariff lists starts a public comment and consultation period expected to last around two months, after which USTR said it would issue a “final determination” on the product list. It has scheduled a May 15 public hearing on the tariffs.
USTR said the tariffs were proposed “in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.” The agency added that such policies “bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as Made in China 2025.
How China will retaliate
China condemned the U.S. announcement and said it would “take corresponding measures of equal scale and strength against U.S. products.”
“The Chinese side strongly condemns and firmly opposes the unfounded Section 301 investigation and the proposed list of products and tariff increases based on the investigation,” a Chinese embassy statement said.
“As the Chinese saying goes, it is only polite to reciprocate. The Chinese side will resort to the WTO dispute settlement mechanism and take corresponding measures of equal scale and strength against U.S. products in accordance with Chinese law.”
China has denied that its policies require technology transfers from U.S. companies and has suggested its own trade targets could include U.S. soybeans, aircraft or heavy equipment. The dispute has raised fears about a possible trade war between the world’s two largest economies.
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The U.S. list heavily targets advanced technology products that benefit from Beijing’s Made in China 2025 program, which aims to replace advanced technology imports with domestic products and build a dominant position in future industries.
The state-led 2025 program targets 10 strategic industries: advanced information technology, robotics, aircraft, new energy vehicles, pharmaceuticals, electric power equipment, advanced materials, agricultural machinery, shipbuilding and marine engineering and advanced rail equipment.
Many products in those segments appear on the list, including antibiotics and industrial robots.
Business community questions approach
U.S. business groups reacted cautiously, saying they agreed with Trump’s efforts to stop the theft of U.S. intellectual property, but questioning whether tariffs were the right approach.
“Tariffs are one proposed response, but they are likely to create new challenges in the form of significant added costs for manufacturers and American consumers,” National Association of Manufacturers President Jay Simmons said in a statement.
U.S. Senator Marco Rubio said in a letter to U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin that he was glad to see “bold” action against China. “These necessary actions constitute an important break with the appeasement of previous administrations, and provide an opportunity to chart a new course for America’s relationship with this strategic competitor,” Rubio wrote.