The Trade War Escalates: Trump Demands Broader Tariffs Against China

Update: Reutersis reporting that Trump is planning to impose tariffs on $60 billion of Chinese imports. The tariffs will primarily target technology and telecommunications imports - but would not be expressly limited to these sectors, according to one source.

Politico reported earlier that Trump rejected a plan for imposing $30 billion in tariffs on Chinese imports, saying they weren't big enough.

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Just when investors thought President Trump might be easing up on his protectionist push following the uproar caused by his decision to slap tariffs on steel and aluminum imports, Politico is reporting that Trump's next trade salvo will be explicitly directed at China.


According to Politico, Trump last week told Cabinet secretaries and top advisers during a White House meeting that he wants to hit China with steep tariffs and other restrictions as retaliation for Chinese policies blatantly designed to siphon valuable intellectual property from US companies. The measures would be a follow up to an order issued by Trump over the summer, when he ordered the Commerce Department to launch an investigation into Chinese IP theft, using an obscure law that was frequently employed by the Reagan administration.

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As we explained back in August, with total bilateral trade of more than half a trillion dollars a year, the list of potential losers from Trump's protectionist policies is notably lengthy:

  • U.S. companies such as Apple Inc., which assemble their products in China for sale in the U.S., and those tapping demand in China’s expanding consumer market.

  • U.S. agricultural and transport-equipment firms, which meet China’s demand for soy beans and aircraft.

  • Manufacturing firms from the U.S. that import intermediate products from China as an input into their production process.

  • Retailers including Wal-Mart Stores Inc. and the U.S. consumers that benefit from low-price imported consumer electronics, clothes and furniture.

  • Other trade partners caught in the crossfire of poorly-targeted tariffs. On steel, for example, U.S. direct imports from China account for less than 3% of the total -- below Vietnam.

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During the as-yet-unreported meeting, US Trade Representative Robert Lighthizer reportedly presented Trump with a package of tariffs that would target the equivalent of $30 billion a year in Chinese imports. In response, Trump urged Lighthizer to aim for an even bigger number, and warned everybody present that they should prepare for an announcement during the coming weeks.

That sent senior officials at the White House, Treasury Department, State Department, Justice Department, the Office of the U.S. Trade Representative and other key agencies scrambling this week to finalize the proposal. While the details were still in flux, aides said the administration is considering tariffs on more than 100 Chinese products ranging from electronics and telecommunications equipment to furniture and toys.

Shortly after Trump authorized the tariffs, trade experts speculated that the steel and aluminum tariffs might not elicit a response from China - despite senior Chinese officials' stern threats of retaliation - because China's industrial sector doesn't directly send that much steel to the US (instead, it funnels its wares into other countries, where they help drive global metals prices lower).

However, we noted at the time that China could be considerably more enraged if the administration slaps tariffs on finished Chinese goods, like, for example, toys.

And if the Politico report is accurate, it appears that Trump is poised to do just that:

"Steel tariffs are one thing. Taking on the entire Chinese industrial policy apparatus that is designed to suck technology out of the world is another,” said one outside adviser to the administration who has been briefed on the planning and was not authorized to speak on the record.

An investigation conducted in 2011 by the International Trade Commission found that China's intellectual property theft had cost US producers nearly $26 billion in losses in 2009 on copyrighted material alone. Another study from the US software industry in 2011 put software theft losses as high as $60 billion.


Furthermore, Visa restrictions being mulled over by Trump could stem the influx of Chinese undergraduate and graduate students pouring into US universities...

The visa restrictions could hit Chinese students going to school in the United States, especially graduate students in science and technology programs, as well as other Chinese nationals working in sensitive jobs like at national laboratories. But some administration officials have raised objections to the visa restrictions and it’s unclear whether they’ll be included in the final package.

Even before the Politico report - which added to investors' worries about Trump taking a harder line on trade - the Nasdaq led the market lower as investors worried that Trump's decision to replace Secretary of State Rex Tillerson with CIA Director Mike Pompeo could signal that he's taking a harder line on trade and national security - the reason he cited for quashing Broadcom's pursuit of Qualcomm... and additional Section 301 concerns.


China accounts for roughly half of the US's $800 billion trade deficit in physical goods. Nikkei reports that, after delivering a proposal to the president about imposing more tariffs and restrictions on China, US Trade Representative Robert Lighthizer has reportedly been pressuring US allies to impose their own trade restrictions against China.


However, his requests have been met with only a lukewarm response - largely because allies like Japan don't have an equivalent to Section 301 of the Trade Act of 1974.

The Office of the U.S. Trade Representative sent a proposal to the White House seeking tariffs on various Chinese products, restrictions on investment in the U.S. by Chinese companies and limits on visas for certain Chinese nationals, a source familiar with international trade said. Tariffs would apply not only to information technology products, often the target of intellectual property theft, but also consumer goods like clothing.


But Tokyo rejected the proposal, saying hard-line policies will be difficult to adopt since Japan has no law resembling Section 301, according to a U.S. trade official. Japan instead proposed filing a joint suit against China within the World Trade Organization framework, the official said.


The USTR is also urging allied countries to take similar measures against China. The office has asked nations such as Japan, which has long opposed China's intellectual property practices, to synchronize their policies.

As we pointed out earlier this month, the rumor floating around Washington is that the White House will seek $1 trillion in Section 301 tariffs.


Bes Tue, 03/13/2018 - 15:39 Permalink

trade wars lead to actual wars

when shit is falling apart

they (TPTB) always take us

to fucking War

over the cliff bitchez!

Cadet Bone Spurs is leading the charge this time.

???ö? Bes Tue, 03/13/2018 - 15:41 Permalink

The USA has not benefited from globalism.  Trade balance is in the negative trillions since the 80s'.

The world has plenty of consumers eager for high quality, US brands.  Some of the finest food products in the world are American.  You think American's can't program robots to make all the shit they make in China?  Of course they can. No need for the USA to stimulate foreign economies anymore.

Time to move on. Past time in fact.  China has all the money.  That's why the British are sucking Chinese dicks.  If you want to know who in the world has all the money, just watch whose dicks the British are sucking. They've done it for centuries. They are masters at it. And they will suck any dick for money. 

And fuck you MI6.  You meddled in the US elections.  Not some Russian trolls with a $100,000 Facebook budget.

In reply to by Bes

Dutti Stuck on Zero Tue, 03/13/2018 - 15:55 Permalink

"Trump last week told Cabinet secretaries and top advisers during a White House meeting that he wants to hit China with steep tariffs and other restrictions as retaliation for Chinese policies blatantly designed to siphon valuable intellectual property from US companies."

It's about time someone stands up to the Chinese regarding decades of their abusive behavior - Thank you Trump!

In reply to by Stuck on Zero

JoseyWalesTheOutlaw Bes Tue, 03/13/2018 - 16:26 Permalink

Trying to teach around the niggers in public school is the problem and has been for 50 years. You can't make chicken salad out of chicken shit no matter what brand of Mayo you use. Protecting the useless ghetto kids in high school that can't/don't want to learn ruins education for all the others that do want to learn. The useless left can't handle that and the democrats need their vote otherwise there is no democratic party.


Democratic Party= collection of fuking trash. 

In reply to by Bes

serotonindumptruck Give_me_liberty_or Tue, 03/13/2018 - 16:07 Permalink

The Greatest Generation and the Boomers who followed them are, for the most part, unreachable and unteachable.

The vast majority of them represent the major voting blocs of the two political parties that comprise our elected representatives.

Somebody who voted Democrat from the time that they cast their first ballot in 1960 is unlikely to be swayed by any argument that might change their minds.

Most older folks are resolute and absolutely firm in their politics, and nothing that you can say will persuade them otherwise.

Most of them obtain their news and shape their political viewpoints from the MSM.

Unfortunately for Generation Xers and the Millenials, the Greatest/Boomer generations still vote in far greater numbers than the younger generations.


In reply to by Give_me_liberty_or

johnnycanuck ???ö? Tue, 03/13/2018 - 16:40 Permalink

" The USA has not benefited from globalism "

The USA, and the bankers on high created globalism as we know it and indeed the US has benefited from the stand point of Corporate dominance in world markets. 

That doesn't mean they are keen to bring profits back to the US and pay taxes on it.  The opposite of course is true.

In reply to by ???ö?

MortimerDuke ???ö? Tue, 03/13/2018 - 17:50 Permalink

Say I grant you the assertion the US has not benefited from global trade.  You do realize that if we've got a trade deficit with a country, we also necessarily have a capital account surplus with them, right?  And the natural consequences of closing a trade deficit with China means the necessary loss of the capital account surplus.  And that means higher interest rates.  True, that would be a welcome change for savers, but try to remind them of that as we cascade into a recession once the higher rates expose all the errors made in the low-rate environment of the last decade - or longer.  I wish we didn't ever issue the debt that the Chinese have bought, but we did.  Now, a trade war with China will have consequences that many are not going to appreciate, and that assumes that war remains a gentlemanly war over goods.  And I must respectfully disagree about "China having all the money."  May I suggest you look at the rankings of per-capita GDP numbers from the CIA database?  By the way, I have no problem at all agreeing that China cheats in trade.  They very clearly do.  I simply question the notion that somehow tariffs make us any better off.  How does that work?  "Teaching China a lesson" is worth what exactly?  And if it is necessary to teach China a lesson, why do we have to punish US consumers and China at the same time?  After all of the long-needed pro-economy work in his first year in office, it seems a shame to see Trump risk hamstringing it with these current trade policies.  But you do have an interesting "oral history" of the Brits.

In reply to by ???ö?

zzz111 MortimerDuke Tue, 03/13/2018 - 21:49 Permalink

Your arguments are that 1. interest rates will increase  2. trade war and war probability will increase  3. China does not have a high GDP per capita, and 4. US consumers would pay more.  Generally people have been worried about increase of interest rates as a result of money printing and inflation.  China tariffs would provide the US with money that can be used instead of printing almost a trillion a year so this would decrease money printing and therefore decrease interest rates.  China tariffs would bring some manufacturing back to the US or at least slow it's outflow to China; this should also decrease interest rates because the US government would get corporate taxes from the US manufacturers and also having manufacturing capabilities would make the USD more valuable.  Additionally, increased US manufacturing would make some persons leave college and stop getting student loans and work which would decrease US money printing and therefore help decrease interest rates.  Being able to get a good job would also get some people out of long term disability or welfare and this would also help decrease interest rates.  For 2, we may get a backlash trade war from China but we have already lost the trad war with them so we can't lose any more so we have all the leverage.  As far as a hot war is concerned, we would be better off having more US factories because they could be converted into producing war products if necessary.  For 3, China does not have the highest GDP per capita but it has increased extremely fast and on this list of 190 countries it has the 7th fastest GDP increase (GDP YoY: at 6.8% and the US barely has the inflation rate of GDP YoY increase of 2.5% vs an inflation rate of 2.5%. And finally, I would prefer things be made in the US or Europe rather than China because many of the Chinese products I have bought have been of inferior quality and sometimes have not lasted as long as US or European made products.  Right now, since they have moved all factories to China for some products I can't get them made in the US or Europe so this would really help if the outflow of factories stopped going to China and maybe some would come back to the US also.

In reply to by MortimerDuke

popeye ???ö? Tue, 03/13/2018 - 21:22 Permalink

The US HAS benefited from globalism. It issues the worlds reserve currency, allowing for the extraordinary issue of debt at virtually no cost (at present).

US domination of world finance has also provided the US with extraordinary leverage over all other nations.

I'd call that benefiting, even if benefit 1 may be contingent upon timeframe.

In reply to by ???ö?

Scipio Africanuz ???ö? Wed, 03/14/2018 - 04:00 Permalink

The USA has not benefitted from globalization??? What do you call the petrodollar then? Please understand that regardless of what Trump or whoever does, living standards are gonna take a big cut.

It hasn't even begun yet, we're still in the fang-showing stage, wait till the claws come out then it's on big time. It was fun while it lasted but now, the free ride is over.

In reply to by ???ö?

lester1 Bes Tue, 03/13/2018 - 16:01 Permalink

I'm with Trump on this. Something has to be done to stop these insane trade deficits we have with China. Either they open their markets to American made products or we add tariffs on the crap they import here.


President Trump holds all the cards here.

In reply to by Bes

DragonWings Bes Tue, 03/13/2018 - 18:43 Permalink

Well, when a Chinese product is sold on your local market at a price that is below the cost of your raw materials, it means something is seriously wrong with rate of exchange balances and other factors.

We used to blame the differential in pricing to efficiency, forcing most of the US industrial apparatus to be shut down. Clearly it is not a matter of efficiency and cost of labor, now it is pretty much evident.

So... we have 2 options, we shut down additional industrial sites, or charge what comes in. US market is the most open and vulnerable market in the world. Now however what ever is left is important not only from the economic point of view, but also from the strategical point of view...

You cannot have free trade in the current situation and it was criminal not to have understood that before getting to this point.


In reply to by Bes

Francis Marx Tue, 03/13/2018 - 15:43 Permalink

The pimps in the white house for the past 30 years have been selling the american peoples talent like we were whores. Bout time someone doing something.

Zepper Tue, 03/13/2018 - 15:49 Permalink

The day I start seeing these fucking dollar store trash bin stores all closed because they cant get their Chinese made crap anymore is a great day. The day that I see Amazon going in the red quarter after quarter because they cant peddle their Chinese made crap anymore is an AWESOME DAY!


Not just tariffs, charge the Chinese for all the fucking landfill space we have to come up with daily to house their fucking junk that lasts a few days at most.


DragonWings Zepper Tue, 03/13/2018 - 19:00 Permalink

What is funny is that most morons complain about global warming, the planet in danger, save the environment... and then they welcome the shit that lasts nothing as long as it is apparently cheaper!!!

"Free trade", "no pollution"

Well actually it is ok if pollution is made worst somewhere else on the other side of the planet: not our local problem anymore, "we are clean, somebody else has to do his own homeworks now to be as good as we are, we only buy what they make because it is cheaper, but we would never manufacture it here because we are too good and clean"

these guys are really a piece of work and make up the bulk of our society... totally clueless!!!

In reply to by Zepper