U.S. Preparing to Proceed With Tariffs on Chinese Goods

The Trump administration, deepening its global trade offensive, is preparing to levy tariffs on tens of billions of dollars of Chinese goods in the coming week, perhaps as early as Friday—a move that is likely to spark heavy retaliation from Beijing.

Senior trade officials in the White House, the Commerce and Treasury departments and the U.S. Trade Representative’s office met on the issue before President

Donald Trump

went to a summit of the Group of Seven industrialized nations in Canada on Friday—and agreed that the U.S. should proceed, said U.S. officials and others briefed on the talks.

Mr. Trump hasn’t given his final approval and could have second-thoughts about applying heavy pressure on China, the officials said, particularly because the U.S. wants Beijing’s cooperation in its efforts to get North Korea to give up its nuclear weapons. Mr. Trump returned to Washington on Wednesday morning after meeting with North Korean leader Kim Jong Un in Singapore.

The administration initially planned tariffs on $50 billion in goods, but the total could change as the list is refined, with some products taken off and others added following a public comment period.

Mr. Trump has shied away from confronting China at various times in the hope that it would encourage Beijing to help out on North Korea. But he signaled after his summit with Mr. Kim on Tuesday that he was continuing his hard line.

“I have to do what I have to do,” he said at a press conference. “We have a tremendous deficit in trade with China, and we have to do something about it.”

In recent weeks, national security officials have argued in White House meetings that trade enforcement and North Korea should be considered on separate tracks, according to the officials briefed on the discussions. Beijing will help on North Korea if it sees that it is in its own interest, not because of U.S. trade-enforcement actions, the officials have argued.

The agreement by the heads of the agencies supporting tariffs represents an unusual moment of consensus on trade in an administration often at odds with itself over how to proceed. Trade hawks have sought to crack down hard on China, while globalists seek compromise.

The Trump administration considers tariffs as necessary to press China to halt violations of U.S. intellectual property rules, including Beijing’s forcing U.S. companies in China to transfer technology to their Chinese partners.

Tariffs are unlikely to come as a surprise to Beijing. Chinese officials pored over the statement from the Singapore summit and the transcript of Mr. Trump’s press conference for clues about what the Trump administration would do next on trade. Expectations were high that the administration would release the tariff list as planned, according to Chinese officials.

The administration had set a deadline for Friday for releasing a list of products that would be covered under a new tariff regime.

Secretary of State Mike Pompeo, who urged U.S.-China trade calm ahead of the Trump-Kim summit, is scheduled to visit Beijing on Thursday to discuss the summit’s outcome.

In early April, the administration released a preliminary list of about $50 billion in Chinese goods to be subject to tariffs. It has held public hearings on the list of 1,300 categories of products to see whether any of the goods it selected would unduly harm U.S. consumers and businesses.

A number of companies also urged the administration to add new products.

U.S. Steel
Corp.

, for instance, urged tariffs on tin mill products; SolarWorld Americas Inc. recommended tariffs on solar cells, in addition to ones already in place.

The office of U.S. Trade Representative

Robert Lighthizer

is due to release the final list on Friday. Tariffs on products that weren’t eliminated are set to be imposed shortly, perhaps as early as Friday, said the officials familiar with the discussions.

High-tech goods such as semiconductors could be added to the list, as the Trump administration looks to block China’s acquisition and sales of advanced technology.

Industry would have a chance to comment on new products on the list before they are subject to tariffs, although the procedure to be followed is unclear at this point, the officials added.

One issue: many high-tech products imported into the U.S. from China are produced by U.S. and other Western companies that do some processing or assembly work in China.

Tariffs then could hit U.S. companies as hard as Chinese ones, technology companies complain.

“The continued focus on tariffs—regardless of how they are scoped—will not create lasting change that will benefit American workers, consumers, and companies,“ a spokesman for the Information Technology Industry Council, a trade group of technology companies, told The Wall Street Journal.

Instead, the spokesman said, the administration should “engage in serious negotiations with the Chinese government…while working with allies to ensure that China implements real and tangible changes.”

Along with tariffs, the Treasury department is also working on ways of restricting Chinese investment into what the White House calls “industrially significant technology” unless Beijing substantially eases its restrictions on U.S. investment. The investment proposal is due on June 30 and will also be followed by a comment period, the officials said.

After the U.S. initially threatened 25% tariffs on $50 billion in Chinese goods, Beijing followed up with its own threat to levy duties on $50 billion in U.S. exports to China, particularly aircraft and soybeans. Hearing that, Mr. Trump upped the ante and said the U.S. would add another $100 billion of goods to the U.S. tariff list. The U.S. hasn’t followed up on that threat by enumerating what goods would be included in that batch.

Chinese officials have tried to forestall tariffs, including telling Commerce Secretary

Wilbur Ross

in a recent trip to Beijing that Chinese firms would buy nearly $70 billion of American farm, energy and other products if the Trump administration drops threatened tariffs.

In White House meetings, President Trump has dismissed that offer, say U.S. officials.

No further negotiations have been planned by Washington and Beijing, according to officials on both sides.

Write to Bob Davis at bob.davis@wsj.com and Lingling Wei at lingling.wei@wsj.com

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