[The announcement comes hard on the heels of Mr. Trump’s tariffs on steel and aluminum imports, which are scheduled to go into effect on Friday and are aimed at combating a flood of cheap metals into the United States, including Chinese steel.]
By Mark Landler and Alan
Rappeport
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A factory in China. The
Trump administration is preparing stiff tariffs on Chinese
imports, including clothing, shoes
and electronics, as well as restrictions on
investment. Credit Chandan
Khanna/Agence France-Presse — Getty Images
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WASHINGTON
— President Trump on
Thursday plans to announce at least $50 billion worth of annual tariffs and
other penalties on China for its theft of technology and trade secrets, which
administration officials say has robbed American companies of billions of
dollars in revenue and killed thousands of jobs.
The measures would mark Mr. Trump’s most
aggressive move yet against a fast-rising economic rival that he has accused of
preying on the United States.
The measures will be targeted at imported
Chinese goods in as many as 100 categories — hitting everything from shoes and
clothing to consumer electronics — and will impose restrictions on Chinese
investments in the United States, people briefed on the measures said.
Mr. Trump will instruct the Treasury
Department to pursue restrictions on certain types of Chinese investments to
counter China’s ambitious industrial policy, which aims to dominate
cutting-edge sectors like artificial intelligence and mobile technology,
officials said.
For Mr. Trump, the steps fulfill a frequent
campaign pledge to crack down on China, which he has characterized as an
“economic enemy” that has “taken advantage of us like nobody in history.” But
the actions will only ratchet up tensions with the Chinese government at a
moment when Mr. Trump needs its support for his campaign to curb North Korea’s
nuclear program.
The announcement comes hard on the heels of
Mr. Trump’s tariffs on steel and aluminum imports, which are scheduled to go
into effect on Friday and are aimed at combating a flood of cheap metals into
the United States, including Chinese steel.
Taken together, Mr. Trump’s actions
demonstrate his resolve to turn away from a decades-long move toward open
markets and integrated world economies and toward a more starkly protectionist
approach that erects barriers around a Fortress America. The moves risk further
isolating the United States at a delicate geopolitical moment by inflaming key
allies, as well as China.
The effect of the China tariffs would be
larger and more concentrated than the steel and aluminum measures and would
have a bigger impact on United States consumers, who are heavy purchasers of
electronics, clothing and other Chinese imports. The steel and aluminum tariffs
would affect imports of roughly $33 billion, excluding Canada and Mexico, which
are expected to be exempt from the measures, said Joseph Parilla of the
Brookings Institution. The China moves would affect at least $50 billion a year
in imports, officials said.
Yet unlike the metal tariffs, which caused
bitter divisions within the Trump administration and were opposed by many
Republican lawmakers and business people, the technology moves against China
are likely to be politically popular on Capitol Hill and throughout some
industries.
The business community, which long defended
China against accusations of theft of intellectual property, has grown more
dissatisfied with adverse treatment in the Chinese economy. With the Chinese
government and state-owned enterprises playing an ever-larger role in the
market, the environment for American companies has steadily deteriorated.
“Their theft costs us over $350 billion per
year, so the bigger the better,” said Daniel DiMicco, a steel executive and
trade adviser to the Trump campaign, referring to the forced transfer of
intellectual property and other unfair practices alleged by the administration.
The country, under the leadership of
President Xi Jinping, has sought to build up businesses it considers critical
for defending its national security interests and meeting its economic goals.
Beijing has been enlisting American companies
in its effort. As it looks to create its own national champions, China has been
forcing American stalwarts like Qualcomm, Advanced Micro Devices and
Hewlett-Packard Enterprise to create joint ventures, hand over their technology
or develop local expertise. If they do not, companies risk losing access to
China, the world’s second-largest economy.
But China’s national security interests are
colliding with those of the United States. A worry is that companies are
handing over critical technology that the United States needs for its military,
defense or infrastructure. By transferring technology, they may also be giving
an edge to Chinese rivals that one day may prove dominant.
This month, the United States government
blocked Broadcom’s hostile bid for Qualcomm, a chip maker, citing national
security concerns. The fear was that the acquisition would weaken Qualcomm,
allowing China an advantage in the race to build the next generation of
wireless technology.
Last August, Mr. Trump ordered an
investigation into four types of Chinese trade practices, including requiring
companies to share trade secrets to gain access to the Chinese market, forcing
them to license their technology in China at below-market rates and
cyberintrusions to steal technology. China also uses state funds to buy American
high-tech companies.
On Wednesday, a senior official at the United
States trade representative’s office said the investigation, which is now
complete, found ample evidence of abuses in all these areas. The official said
China had not changed its behavior, despite years of negotiations in the World
Trade Organization and economic dialogues with the last three administrations.
If anything, the administration said, its
failure to honor the obligations it made when it joined the World Trade
Organization has gotten worse. China’s theft of intellectual property,
officials said, contributed to its trade surplus of $375.2 billion with the
United States last year. China has also introduced a plan to gain global
leadership in advanced information technology, new energy vehicles and
aerospace, among other industries.
Mr. Trump is expected to ask the United
States trade representative to come up with a full list of products to
retaliate against within 15 days, according to an official briefed on the
plans.
Experts worry that the United States’ actions
could ignite a trade war, noting that Chinese economic officials have a keen
understanding of the American system and are good at designing targeted
retaliatory measures against American agricultural products and other exports.
Mr. Trump’s moves will also test the personal
relationship he has cultivated with Mr. Xi, the Chinese president. Last year,
Mr. Trump held off imposing tough trade measures against China because, he
said, Mr. Xi was cooperating in his campaign to pressure the leader of North
Korea, Kim Jong-un, over his nuclear and ballistic missile programs.
Two weeks ago, Mr. Trump agreed to meet Mr.
Kim for talks, surprising Mr. Xi, whom he did not consult before making the
decision. Now, Mr. Trump will be seeking the Chinese president’s support for
his diplomacy at the same time that trade tensions between are on the rise.
Still, given their deep frustration, business
executives may greet Mr. Trump’s move with quiet satisfaction.
“There’s now palpable frustration across a
number of sectors of the American business community feeling increasingly
squeezed by an ever-more-emboldened China,” said Scott Mulhauser, a former
chief of staff at the American Embassy in Beijing. “While some are eager to
continue seeking as much engagement with China as possible, others are openly
using terms and invoking options they hadn’t previously considered.”
The United States’ chief trade
representative, Robert Lighthizer, who testified before the House Ways and
Means Committee on Wednesday, indicated that the administration was
specifically concerned about Chinese policies that compel American companies to
share technology when they make investments in China.
“There are certain technology products that
are under assault,” Mr. Lighthizer said. “You have to give consideration to
whether or not you would put tariffs on those products.”
But he noted that any tariffs would take into
account the economic impact of raising the cost of consumer goods. “You would
create an algorithm that would maximize the pressure on China and minimize the
pressure on U.S. consumers,” he said.
Mr. Lighthizer’s testimony came a day after
the Treasury secretary, Steven Mnuchin, was warned by global economic leaders
at a meeting in Buenos Aires that the United States was risking a trade war by
initiating the tariffs. President Trump declared earlier in the month that
“trade wars are good, and easy to win.”
But Mr. Lighthizer struck a different note on
Wednesday. “Nobody wins from a trade war,” he said. “We certainly don’t want a
trade war. On the other hand, you have to ask yourself, can we go on with an
$800 — and growing — billion trade deficit?”
Mark Landler reported from Washington, and
Alan Rappeport from Santiago, Chile. Ana Swanson contributed reporting from
Washington, and Natalie Kitroeff from New York.