Trump To Launch Trade War With China On Friday, Beijing Vows Retaliation

Yesterday, the WSJ reported that the Trump administration is planning to begin a probe of what the U.S. sees as violations of intellectual property by China. Against a backdrop of Trump’s frustrations with domestic policy, sliding approval ratings and disagreement with China over North Korea, the chances of protectionist action are rising, as is the probability of a "hot", retaliatory trade war. This morning ow learn when Trump is set to fire the first shot. Reuters reports, citing White House officials, that President Trump is expected to make a speech and sign a memorandum at the White House on tomorrow, Friday, that will target China's intellectual property and trade practices, effectively firing the first shot in what could escalate into a major US-China trade war.

This will be the opening salvo to several months of trade actions, and is expected to be followed by actions on steel and aluminum dumping — which could include tariffs and quotas — and subsequent measures to protect services, and comes at a time when Trump has become increasingly frustrated with the level of support from Beijing to pressure Pyongyang to give up its nuclear and missile program.

Trump has said in the past that China would get better treatment on trade with the United States if it acted more forcefully against Pyongyang. Beijing has said its influence on North Korea is limited. China has countered that trade between the two nations benefits both sides, and that Beijing is willing to improve trade ties. A senior Chinese official said on Monday there was no link between North Korea's nuclear program and China-U.S. trade.

As Axios adds, administration officials say Trump is doing this because of complaints he's heard from Silicon Valley executives saying Chinese IP theft is one of their biggest challenges. Allegedly, Peter Thiel has been involved in crafting this new step.

In a rare show of bipartisanship, on Wednesday three top Democratic senators urged the president to stand up to Beijing, perhaps in hopes of further deteriorating the US economy and thus shortening Trump's tenure even more. Senate Democratic leader Chuck Schumer pressed the Republican president to skip the investigation and go straight to trade action against China.

"We should certainly go after them," said Schumer in a statement. Senators Ron Wyden of Oregon and Sherrod Brown of Ohio also urged Trump to rein in China.

That's all Trump needed to hear.

So what happens next? About a week after Trump's announcement, the U.S. Trade Representative, Robert Lighthizer, is expected to announce that he's initiating an investigation into unfair Chinese trade practices — using a rarely-used tool, section 301 of the Trade Act of 1974. The investigation paves the path to the U.S. taking potentially aggressive retaliatory actions against China such as tariffs on Chinese imports or rescinding licenses for Chinese companies wanting to do business in the U.S.

U.S. Section 301 investigations have not led to trade sanctions since the WTO was launched in 1995. In the 1980s, Section 301 tariffs were levied against Japanese motorcycles, steel and other products. "This could merely be leverage for bilateral negotiations," James Bacchus, a former WTO chief judge and USTR official, said of a China intellectual property probe.

To be sure, Chinese IP theft is nothing new, and has long been an issue for major US tech companies like Microsoft and prior administrations. It's also a major issue for agriculture and manufacturing - and any sector that has proprietary information related to their production practices. However, in the past, U.S. administrations and companies have been wary about publicly confronting the Chinese government, preferring to do things behind closed doors and in a more diplomatic approach.

Meanwhile, China denied all accusations. Ministry of Commerce spokesman Gao Feng said Thursday that China pays "high attention" to intellectual property and wants to maintain good cooperation with the U.S, Bloomberg reported. Still, China has for some time had countervailing measures at the ready in case a trade spat erupts, including legal constraints on foreign companies and import curbs on specific sectors.

And just to make sure that Beijing's position on trade war is loud and lear, China state media signaled the nation would hit back against any trade measures, as it has done in past episodes. This time around, the need to project strength domestically is compounded by the looming twice-a-decade leadership reshuffle that may further entrench President Xi Jinping’s power.

Chinese officials have mulled stemming U.S. imports should retaliation be necessary. Under a draft plan, soybeans have been singled out as the top product that can be dialed back, according to people familiar with the matter. Autos, aircraft and rare-earth commodities have also been identified as potential categories for restriction, the people said.

Still, Trump's offensive comes at a very sensitive time for Beijing: just weeks ahead of the 19th Party Congress, when Xi Jinping wants everything in his economy to be perfect.

"Ahead of the 19th Party Congress, the last thing that China will want is a trade war," said Callum Henderson, a managing director for Asia-Pacific at Eurasia Group in Singapore. "It is also important that Beijing does not look weak in this context. As such, expect a cautious, proportional response."

Of course, ultimately the big question - as Bloomberg puts it - is whether the Trump administration is willing to risk a trade war as it ups the ante. The International Monetary Fund warned last month that “inward-looking” policies could derail a global recovery that has so far been resilient to raising tensions over trade. The problem, for both the US and China, is that as Trump gets increasingly more focused on distracting from his numerous domestic scandals, he is likely to take ever more drastic action in the foreign arena, whether that means "hot war" with North Korea, or trade war with China.

“So far, it’s all been posturing, with little action,”’ said Scott Kennedy, a U.S.-China expert at the Center for Strategic and International Studies in Washington. “Pressure is building to do something, so the U.S. doesn’t look like a complete paper tiger.”

Finally, as discussed last night, a quick analysis of US winners (few) and losers (many) from any US-China trade war, reveals that most adversely impacted would be the states of Mississippi, Georgia, Illinois and  California, all of which maintain deficits at more than 3% of GDP.


Comments

SKYISTHELIMIT Aug 3, 2017 4:45 PM Permalink

So who has the upper hand in the negotiations? According to a report by research firm Geopolitical Futures (GPF), the United States would suffer some damage in a trade war, but would come out on top in the end. “China would feel the impact of U.S. protectionist measures more than the U.S. would feel any economic retaliation China has at its disposal,” the report states.http://www.theepochtimes.com/n3/2205639-how-the-us-could-win-a-trade-wa… 

FreeEarCandy Aug 3, 2017 2:52 PM Permalink

Why call it a trade war? It's a new trade deal and not a trade war. Well there goes the cheap fortune cookies and chop sticks. Xi has egg roll on his face. 

hutnela Aug 3, 2017 2:24 PM Permalink

This was exactly the point I was trying to make yesterday on the thread about the Russian Sanctions bill. Everyone hates US already, and then we do this, because maybe they don't hate us enough? Whats next... wars on multiple fronts that become unsustainable? This looks like the global elite are pushing for a transfer in superpowers... the days of US supremacy are almost over.... Jobs fleeing to China because the rats know the ship is sinking, millionaires leaving populated areas and building luxury bunkers, the retail death spiral (more rats getting out while the getting is good), it all boils down to an event coming soon.... the sudden plunge. If we push away all other countries we have, what.... one lifeline left (The petro dollar) with guys that will make deals with whomever offers the best deal?

sparkadore Aug 3, 2017 12:32 PM Permalink

A chinese pair of leather gloves cost $5, an American pair $15.The american pays 5 types of insurance and is regulated in evey aspect from construction of the building (male/female/undecided bathroom) to the label etc.  This adds the $ difference to the cost.  The chinese build cheap, pay off the inspector, dump toxins into the river, pay employees nothing with no responibility for their health care or disability or retirment or or or....  You want to only buy American, get ready to pay 3 times more for most everything.  A tariff that evens the playing field would give the American a reasonable chance to compete.  Can you imagine starting up a leather tanning business in America!!!  Impossible.

pashley1411 Aug 3, 2017 1:11 PM Permalink

2016 trade defict with China $346 billion.   Shanghai, Shenzhen, we built ya.   And what about Fat-Boy's missle-tossing dystopia?  The louder China screams, the more they are feeling the pain.

Mike Masr Aug 3, 2017 11:17 AM Permalink

All of this sanctions/trade war bullshit pushes China & Russia even closer! Russian Economy Minister Maxim Oreshkin was quoted as saying by RIA Novosti on Wednesday July 26th.  He asserted the restrictions cannot inflict substantial damage on Russia. “Our macroeconomic policy is shaped in such a way so that sanctions-related shockwaves coming from outside do not have significant impact on the Russian economy,” he said. This is because Russia is now economically tied with China and the East. They are implementing a trillion dollar oil and gas deal and building an enormous pipeline system between the two countries. They are also working to do away with the Petrodollar. Russia is the main road for China's new Silk Road Project. Russia and China are additionally working on the circumventing of the US dollar as the world reserve currency and also on an alternative to the international payment system SWIFT. Russia and China are the founding member states of The Shanghai Cooperation Organization (SCO) an intergovernmental economic and military alliance of mutual security. When the US deep state gets its real shooting & ICBM war it will be against a Russia-China Axis. https://www.youtube.com/watch?v=oR670UNhR5U  

indygo55 cesarsp_us Aug 3, 2017 11:00 AM Permalink

"The International Monetary Fund warned last month that “inward-looking” policies could derail a global recovery that has so far been resilient to raising tensions over trade."There we go again with that "recovery" BS. Who, by now believes we were EVER in a recovery? Just the bankers, the IMF and their ilk. I'm sure they think there are still some people that believe it but I don't know where they are. Thats the narrative and there's no changing it. 

In reply to by cesarsp_us

MrBoompi Aug 3, 2017 10:24 AM Permalink

Although I can understand the intellectual property rights issue, I would be more concerned about tariffs and trade barriers.  It should be up to American corporations to protect their intellectual property.  American competitors are just as keen on getting trade secrets from competitors as anyone else.  If a company like Apple provides all means of engineering and manufacturing assistance to Chinese companies, who's at fault if China uses this info and experience for their own citizen's benefit?  At one time I was interested in exporting a product to an Asian country.  Part of the documantation they required was my complete formula and manufacturing instructions.  I refused, but can imagine many companies comply.  Who is to blame when a new competitior pops up over there with an exact match?What about simple restricted trade, like the tariff China puts on US cars and other items?  Why can't we just tell these countries we wish to standardize tariffs so one country's manufacturing sector does not receive favorable treatment?  If we want to bring jobs back to America, there will have to be some restrictions or tariffs on cheap imports made using basically slave labor overseas.  Since the internationalist, globalist oligarchs have set up this current system, it seems they are OK with the loss of American jobs and wage/benefit suppression.  But by all means let's do nothing about that and worry about protecting their intellectual property.  

Son of Captain Nemo Aug 3, 2017 10:43 AM Permalink

Knee-pads-in-chief threatens Russia by signing an illegal bill that has already met with massive disfavor by the only member(s) in the EU that matter "Germany" forcing him to blame Congress even though he acquiesces to put his "John Hancock" on it...

Now openly threatens China because they are massively dumping U.S. Treasuries at an increasing rate with all the U.S. manufacturing labor in that Country

Oh... And the two he's threatening just happen to be the largest holder of nuclear weapons next to the United States...

Regardless of Washington's total "hand wringing" desperation this obviously looks like soon-to-be "Venezuela" in North America or WWIII!...

Not much of a choice for the power brokers either way on how they wish to die!!!

Dumpster Elite Aug 3, 2017 10:13 AM Permalink

"Beijing has said its influence on North Korea is limited."
Not sure about everything else, but that statement is pure unadulterated bullshit. It's like a parent saying, "I know my son is crazed and out of control, but do you expect me to punish him for his behavior? That would be so cruel."

gunzeon Aug 3, 2017 10:12 AM Permalink

someone shoulda done it 20 years ago, a bit late shutting the stable door after the jobs have bolted. It will achieve nothing i suppose.add: :s/jobs/capital+jobs/

Oberst-Gruppenfuhrer Aug 3, 2017 10:10 AM Permalink

(((America))) needs to die, lets face it.   The war hand of the jews needs to die.  We welcome a Putin ordered nuke on DC and Wall St. and a Xi Jinping ordered nuke on Hollywood to free our souls from the satanic grip of Israhell.

Oberst-Gruppenfuhrer Aug 3, 2017 10:07 AM Permalink

Total war!!!  Gotta love the zioplaybook....may the last goy standing please turn off the printing press while (((They))) go hide in their $6 gorillian shekel cost nuke free zones, while the rest of the goy kill each other off. (((They))) have all your shekels now. 

PitBullsRule Aug 3, 2017 10:04 AM Permalink

All you Trumpologists need to check where your computer is made.  The one you are reading this on.  Then check to see where your phone is made.  Then check to see where your light fixtures, appliances, clothing, and shoes are made.  If you do, you'll notice a lot of is made in China.  So you think you can open up a factory in the US?  Have you opened a factory in the US?  The people that made successful factories in the US, are mostly dead and decomposed now.  It was done in a different time, a different culture, with different people.  The products they made were simpler, easier, and the workers were harder working, with stronger work ethics, they were in shape, and they didn't make much money doing it.  Find a young American that isn't overweight and staring at a cell phone, if you find him, thats one you can try in your factory.  Find an American that still knows how to communicate.  Find one that will work hard for 8 hours at a job with no future in it.  If you can find one, you can put him in your factory.  Only problem is, there aren't any.A tax on Chinese imports, will amount to you paying the government, thats all.  Instead of getting your LED light bulbs for 3 dollars, You'll pay 3 for the bulb, and 3 for the tax.  Thats all thats going to happen.  Nobody is going to open an LED light bulb factory in the US, to save your 3 dollars from going to the government.  As usual, you are being conned by a con man, one of the best.  He could talk you into selling your kids if he wanted to.  He knows how to screw you, and he's going to.

Pullmyfinger PitBullsRule Aug 3, 2017 11:07 AM Permalink

Too much dust has filtered through that crack in your skull. What? Are you 19 years old or something? Almost all the products sold in America are actually made by American corporations --in China. My computer, for instance, is an Apple. They could re-establish manufacturing in the US in a matter of weeks--Additionally, 'everyone' is going to build LED manufacturing facilities in the US the moment that the artificially high dollar finally collapses to its true, deeply inflated value.  

In reply to by PitBullsRule

Deep Snorkeler Aug 3, 2017 10:01 AM Permalink

Trump Triumph des WillensFascism is based on hysterical nationalism,hysterical racism and a hysterical leader.As America's techno-industrial fantasiafalters, we will all come to acceptHerr Trump, and overlook his faults, liesand dementia.  We will welcome a cleansing plague and subsequent rebirth.

Is-Be Aug 3, 2017 9:59 AM Permalink

Why don't you just say "Fuggit! Let's have a war with everyone"?Another take is that Trump is doubling down on Congress's stupid bill to sanction Russia.He is pulling the pendulum further than his political opponents would like. (They are counting on Germany to spike their guns)"Come on, have a go, ya mug! Hold me back. Hold me back.'The Congress critters will have to answer to their constituencies about why they have fallen into trade wars with everyone.Ummm. That's right! The Russian hacking thing. Or was it weapons of mass destruction? I get confused about which excuse maps onto which country.

J Mahoney Aug 3, 2017 9:56 AM Permalink

Well LIBS what the hell do you want? Cut the smoke screen and this is ALL about preventing nuclear war with Korea. China wont put ENOUGH pressure on N Korea so TRUMP MUST raise the stakes! Do you want another war to protest? Want massive death to occur?We can both agree the nut job in N Korea must be stopped.If this is only about trade then......
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I appreciate Trumps effort to “right the wrongs” in respect to trade with Asia. There is no need for a trade war, all we have to do is correct the wrongs brought upon us by our own apparently “paid off politicians”. Just the headlines about retail store closings tell us about jobs being lost and commercial real estate getting ready to tank, (Store closings—Penny’s 130-140 stores, Sears/Kmart 150, Macy’s 100, Foot Locker 100, Kohls 16, Office Depot 200, Abercrombie 114, BCBG 118, HH Gregg 88, Pier One 100). We ONLY NEED TO IMMEDIATELY DO AWAY WITH a little known Asian subsidy which is KILLING us. Did you know a small package sent by an Asian online seller only cost them about $1.00 vs the $20.00 we would have to pay to send a package to Asia. We even provide tracking services on that freaking package. This was pushed down our throats thru the “heavy lobbying” by Ebay and Amazon. Problems with this is: 1) Post Office loosing hundreds of millions delivering these cheap packages (taxpayers left holding the bag making up for their losses and eventual USPS pension shortfalls) 2) Uninspected goods come in, many of which are in violation of intellectual property laws and safety regulations. 3) USA stores can’t compete- thus many previous full time jobs in retail have disappeared altogether or with lower paying and reduced benefit part-time jobs. 4) Foreign online sellers are NOT paying any sales tax, income tax, or tariffs like the importers in the USA. 5) Lost jobs equals social security taxes NOT COLLECTED--another freaking problem waiting to rear its ugly face. My advice to TRUMP—do away with only this one unfair trade deal and positive results will be felt FAST, no need for a “tit for tat” trade war.

historian40 J Mahoney Aug 3, 2017 10:07 AM Permalink

"We can both agree the nut job in N Korea must be stopped."  I'm not a cardholding PARTY member of either the D or R variety, so I guess I slipped through your assumption.  I don't care what NK does as long as they don't attack US without cause.  As of now, they have the US/zionist empire continually threatening them for 60 years, keeping the wounds of millions of dead Koreans alive in the North's memory.  If you're afraid of the scary stories, unproven, of NK having nuclear weapons, the "ICBM"s that aren't really, and "Red Dawn" Koreans coming out of the woodwork to get you, I suggest you stop believing in ghosts.  We don't need a war of aggression to murder millions just to comfort you and make you feel better about yourself.

In reply to by J Mahoney

Father ¢hristmas (not verified) Aug 3, 2017 9:56 AM Permalink

Economic salvos are merely war salvos for niggas too pussy for this thing we call the game of life.War with Russia and China?  Motherfucker, let's get it!*cues up "White Roses" by Charlie XCX and chews up a shroom chocolate*Got some pharmaceutical blow on the way too?  Oh, our Father, who art in heaven...