The US government recently announced that up to 1,300 products would be subjected to a 25% tariff in order to counter what the US government considers to be unfair practices by China. Specifically, the US government was concerned about intellectual theft or copyright infringement by Chinese companies in the technology field.
Following some of the controversies and feedback concerning the Trump administration’s decision to impose import barriers against certain countries like China, there has been some new information coming in as follows:
The United States Trade Representative (USTR) has called for commentary from opinion leaders, business insiders, and the general public. China responded with tariffs of its own on products such as soybeans. This response was directly aimed at the farmers that make up a sizeable proportion of President’s Trump’s base. It has been widely reported that the new measures by the US were prompted by an election manifesto that specifically targeted unfair trade.
Key Items on the List
The key items on the list include:
- Medicaments
- Pumps and valves
- Machinery for the oil and gas industry
- Agriculture
- Food and beverage
- Apparel industry
- Motors, generators, trucks, and bulldozers
- Railway cars, automobiles, helicopters, airplanes, and boats
- Consumer products such as dishwashers, microwaves, TVs, and VCRs
Further information about the product list is available on page 57 of the Federal Register Notice.
The areas hit hardest include the manufacturing and agriculture industries. A number of dates have been scheduled for hearings on the justifications, effects, and implications of the measures, as well as the countermeasures from the US:
April 23, 2018: Requests to appear
May 11, 2018: Submission of written comments
May 15, 2018: Public hearing
May 22, 2018: Post-hearing rebuttal comments
What could the US be doing instead?
The US could revisit its stance on tax theory and assess whether the benefits predicted by trickle-down economics are likely to materialize in a globalized economy. For example, the assumption that tax cuts put more money into the economy may be disputed by the notion of the rich getting richer through targeted saving and even tax avoidance.
It seems that the US is responding to the possible retaliation by the Chinese government. The consultative meetings are largely meant to reassure Trump supporters and the business community in general. This may eventually lead to a recalibration of the tariff regimes on both sides.
