The strategy of dealing with China that the president of the United States is creating worries around the world.
President Donald Trump on March 22 signed a tax levy of about $ 60 billion worth of goods imported from China. This is one of Trump’s promises during the campaign, but the news is still a shock to the market, when the S & P fell 2.52%, while the Dow fell 720 points the same day, according to Forbes .
Waiting for a great war
Just before the signing of trade remedies, Trump asserted that the United States had a multi-billion dollar deficit with China. He applied Article 301 of the US Trade Act of 1974, which allowed a president to “take all appropriate action” against any foreign government that hurt the US trade.
Indeed, the Trump administration has been stubbornly accusing China of devaluing its trade deficit. Trump says the $ 500 billion deficit this year is “the biggest deficit for any nation in world history.”
The US Census Bureau figures show $ 375 billion deficit. In 2017, the US exports $ 130 billion worth of goods to China but imports $ 505 billion.
Trump’s decision immediately received a strong response from China. Beijing rejected Washington’s accusations, describing US actions as “typical of unilateral trade protectionism”, and “deeply disappointed” as well as strongly opposed to that. In a statement on March 23, the Commerce Department listed a list of 128 US products subject to retaliatory tax.
It’s just the beginning
Concerns about the US hawkish attitude are groundless. The Trump administration sees this as a key promise in the campaign, as demonstrated by his choice of Peter Navarro as economic adviser. Mr. Navarro has published book ( Death by China ), in which Beijing accused the goodwill earned through “illegal export subsidies and currency manipulation.”
Speaking on March 22, Navarro said the United States was “defending itself strategically against economic attacks.” That self-defense is certainly not confined to the export sector. US Trade Representative Robert Lighthizer claims Chinese companies are “intellectual property thieves”, which, according to a recent report from the Wall Street Journal , have removed US $ 600 billion a year.
In a statement on March 22, Trump insisted that this was only “the first step in more action”. That suggests that Mr. Trump may have put everything in standby, and this move is just another way to pressure China to adjust. In essence, Mr. Trump will wait two more weeks to take the next step, based on the effectiveness of the first tax period.
In addition, US trade representative Lighthizer has yet to publish details of a list of 1,300 Chinese taxpayers. Mr. Lighthizer is scheduled to release the list in 15 days.