Trump imposes tariffs on China for “intellectual property theft”

BY EMMA COOPER ’20

President Trump announced that the United States will impose trade restrictions on China in a speech last Thursday, according to The New York Times. The decision came after the conclusion of a seven-month governmental investigation, which concluded that Chinese companies have engaged in intellectual property theft of American technology and trade secrets.  

The White House outlined plans to levy at least $60 billion in annual tariffs on Chinese imports into the United States,  following accusations that Chinese companies — particularly in the energy, telecommunications and automobile industries — have employed spying, hacking and intimidation tactics to obtain access to intellectual property. 

The Trump administration also sent a letter to Liu He, China’s Vice Premier, with a specific list of requests, as reported by the Wall Street Journal. The requests included asking for a reduction of Chinese tariffs on American cars, increased spending on U.S semiconductors, as well as greater access to the Chinese financial sector for American companies.

Some economists have expressed concern that China will take retaliatory action by targeting American products, effectively resulting in a “trade war.” Christopher Mitchell, professor of international relations and politics, also believes there is a high potential for conflict.

“China will almost certainly attempt retaliation,” he said. “Both because of the direct harm these new tariffs will do to the Chinese economy and because if they don’t retaliate, it will encourage other states to impose similar tariffs on Chinese goods.”

According to Mitchell, these kinds of disputes are traditionally handled by the World Trade Organization (WTO), which determines whether or not a tariff violates WTO rules. If a country continues to impose a tariff in spite of WTO disapproval, the WTO may authorize or deny limited retaliation by the affected party.

“In the past, the United States has adhered to WTO decisions, either removing tariffs or accepting retaliatory tariffs when the WTO ruled against it,” he said. “However, President Trump has earlier expressed skepticism about the WTO, and may chose to launch a second round of tariffs in response to Chinese retaliation even if the WTO rules against the U.S.”

Another course of action Mitchell foresees is if the WTO rules in favor of the U.S. instead, and China dismisses the decision and chooses to retaliate regardless of the WTO’s ruling, which could also lead to spiralling economic conflict.

“It would be in neither side’s economic interest to start a trade war,” he said. “But it may happen anyway, either because the U.S. or China is worried about looking weak internationally or to appease domestic constituencies.”

In an interview with Fox News on Sunday, U.S. Treasury Secretary Steven Mnuchin commented on the situation. “We’re not afraid of a trade war, but that’s not our objective,” he said. Mnuchin stated the government will continue with the tariffs, but that officials are also negotiating with China in attempt to come to an agreement. 

Jessie Liu ’20, an international student from China, is apprehensive about the effect the tariffs will have on the dealings between the two counties. “[The tariffs] would definitely do harm to the relationship between China and the United States, and [they] would cause losses on both sides instead of mutual benefits,” she said.

The restrictions demonstrate a shift in relations between China and the United States, who have often struggled to reach agreements on trade and other economic issues. 

“Candidates for [the presidency] have often criticized incumbent presidents as soft on China,” Mitchel explained, citing examples such as George W. Bush, who initially raised concerns about China as an economic rival. “However, once in office, they’ve changed their tune and started seeing more good than harm in the U.S-China trade relationship.”

He believes that where the Trump administration deviates from the policies of previous presidencies is “taking the kind of hard line position that presidential candidates have often held but softened when in office, rather than the ‘soft touch’ approach to China adopted by presidents of both parties, which attempted to maintain good relations with China, while also gently pushing it on issues such as intellectual property and subsidizing exports.”

Mount Holyoke News

Mount Holyoke News , Blanchard Campus Center, 50 College Street, South Hadley, MA, 01075