The U.S. tariffs are aimed at forcing China to modify and suitably change its coercive trade policy of forcible transfers of U.S. intellectual property to its domestic companies and gain technological advantage.
U.S. President Donald Trump has directed official to identify Chinese imports worth $100 billion on which additional tariffs can be imposed, thus upping the ante in a high-stakes trade conflict between two of the largest economies of the world.
These additional measures are being considered “in light of China’s unfair retaliation”.
“This is what a trade war looks like, and what we have warned against from the start,” said Matthew Shay President and CEO of the National Retail Federation.
Financial markets have been roiled for days in the wake of the conflict. After a regular bullish trading day, U.S. equity futures dipped sharply in after-market-hours trading.
U.S. stock futures ESc1 was down by 1% and the USD dipped against a basket of major currencies. Chinese markets were closed for a holiday.
Trump stated the U.S. Trade Representative had determined China “has repeatedly engaged in practices to unfairly obtain America’s intellectual property.”
The tit-for-tat escalation of tariff announcements have fanned fears that the unfolding trade war could potentially slow down if not crush global growth.
Earlier this week, USTR had proposed levying a 25% tariffs on more than 1,300 Chinese industrial and other products across a wide gamut of segments ranging from electronic components to flat-panel televisions.
Eleven hours later, China came out with its own list of duties targeting American imports worth $50 billion, including soybeans, cars, aircraft, beef and chemicals.
“Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers,” said Trump.
Clearly China has more to lose especially since in 2017 its trade surplus with the United States was $375 billion. Trump aims to trimp this down by at least $100 billion.
As per a senior U.S. official who spoke on the condition of anonymity, although formal negotiating sessions have yet to be set, the United States was willing to negotiate with China.
The USTR’s “Section 301” investigation authorizing the tariffs alleges China has systematically sought to misappropriate U.S. intellectual property through joint venture requirements that often cannot be negotiated without technology transfers.