Trump Administration Threatens Even Higher Tariffs On China

Aug 1, 2018
Originally published on August 2, 2018 2:03 am

President Trump is ratcheting up trade tensions with China, threatening to increase proposed tariffs on Chinese imports from 10 percent to 25 percent.

The higher tariffs, which would apply to some $200 billion in Chinese imports identified by the administration last month, represent an effort to get Beijing to address longstanding unfair trade practices, officials say.

"The Trump Administration continues to urge China to stop its unfair practices, open its market and engage in true market competition," said U.S. Trade Representative Robert Lighthizer in a statement. He said the president had asked him to consider increasing the proposed tariffs.

"We have been very clear about the specific changes China should undertake. Regrettably, instead of changing its harmful behavior, China has illegally retaliated against U.S. workers, farmers, ranchers and businesses," Lighthizer said.

Chinese officials said they were prepared to retaliate again with higher tariffs of their own.

"U.S. pressure and blackmail won't have an effect. If the United States takes further escalatory steps, China will inevitably take countermeasures and we will resolutely protect our legitimate right," Chinese Foreign Ministry spokesman Geng Shuang said in a press conference Wednesday.

The higher tariffs are not a done deal. Officials say there will be a comment period for businesses and people affected by the tariffs. Still, the administration's threats represent a significant escalation of trade tensions with China.

"I think it is a very serious situation. I think it would be a very complicated thing to get out of, because I don't see an easy remedy once we go down this path," said Michael Camuñez, president and CEO of Monarch Global Strategies and former U.S. assistant secretary of commerce for market access during the Obama administration.

Camuñez notes that the Trump administration has given mixed signals about how tough it's willing to be with China, and that has complicated efforts to resolve the conflict.

While Treasury Secretary Steve Mnuchin has attempted to work out a deal with Beijing, other officials such as Lighthizer have taken a much tougher stance, he says.

"There are folks in the White House that really think the best approach to China is a very aggressive one, and that position clearly seems to be prevailing," Camuñez says.

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AILSA CHANG, HOST:

President Trump is ratcheting up the pressure on China over trade. The administration today threatened to raise proposed tariffs on Chinese imports from 10 percent to 25 percent. That would turn the ongoing tensions between Washington and Beijing into a full-fledged trade war. To help us explain what is unfolding, we're joined now by NPR's Jim Zarroli. Hey, Jim.

JIM ZARROLI, BYLINE: Hi.

CHANG: So how did the White House explain why it's doing this?

ZARROLI: Well, the United States has already threatened to impose tariffs of 10 percent on $200 billion-worth of Chinese imports. And senior administration officials said today that President Trump has told U.S. trade representative Robert Lighthizer to consider raising the tariffs to 25 percent. This isn't a done deal. There's going to be a comment period, for instance, before this would go through. But clearly there's this effort now to show that the administration isn't going to back down. It's going to step up the pressure and sort of take this as far as they need...

CHANG: Right.

ZARROLI: ...It needs to.

CHANG: So how is China responding so far?

ZARROLI: Well, when news of this threat of a tariff increase came out today, Beijing issued a statement - a strong statement saying it wouldn't give in to blackmail and threats. And U.S. officials say this has been China's response all along. They - the administration says it's been in talks with China. Over and over again, it's asked it to address concerns about its unfair trade practices. The U.S. wants China to act more on a free-market basis, stop preventing U.S. companies that want to do business there from entering the market.

China hasn't addressed these concerns, the administration says. And, in fact, it's retaliated with tariffs of its own. The administration says they've essentially doubled down on their unfair practices, and there's no sign now that they're going to reverse course.

CHANG: So this constant one-upping, I mean, what does this say about the current state of the talks between U.S. - the U.S. and China?

ZARROLI: Well, I - it says the countries are - they're playing sort of a big game of chicken. I spoke today to Michael Camunez, who was in the Commerce Department in the Obama administration working on trade issues. And he says he thinks this has the potential to really escalate now.

MICHAEL CAMUNEZ: I think it is a very serious situation. I think it would be a very complicated thing to get out of because I don't see an easy remedy once we go down this path.

ZARROLI: And Camunez says one of the problems is that the Trump administration still seems to be talking out of both sides of its mouth. You have Treasury Secretary Steve Mnuchin, who has been trying to come to some kind of deal with China to resolve these issues. But there are others in the administration, people like Robert Lighthizer, the U.S. trade representative, who - who's often seemed to be on a different page.

CAMUNEZ: There are folks in the White House that really think that the best approach to China is a very aggressive one. And that position clearly seems to be prevailing.

CHANG: So what does this all ultimately mean for American consumers? How are they going to feel all this?

ZARROLI: Well, it's not clear. I mean, one of the interesting things that's happened here is that as these trade tensions have played out really all over the world, we've seen what often happens, which is that people - investors turn to safe havens like U.S. Treasury debt, like the dollar. And the Chinese currency has actually weakened. So on the one hand, you have - and that tends to make the cost of Chinese imports to the United States lower.

So on the one hand, you have these tariffs that are supposed to increase the cost of imports. But the Chinese currency is weakening, so the costs are going down. So in general, we can't really tell what the impact is yet. But I think it's safe to say a lot of businesses and a lot - especially a lot of farmers are very nervous about where this is going.

CHANG: That's NPR's Jim Zarroli. Thank you, Jim.

ZARROLI: You're welcome.

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