The Trump administration intends to announce new tariffs on Chinese imports on Thursday, along with other measures, in response to the “theft” of US intellectual property.
As fears of an escalating trade war spiked, Beijing launched a pre-emptive denunciation, accusing the United States of “repeatedly abusing” trade practices.
The tariffs set to be unveiled are said to be worth up to US$60 billion. US Trade Representative Robert Lighthizer indicated on Wednesday that they will target China’s high-tech sector and that the administration could also restrict Chinese investments in the US. Other sectors such as apparel could also be hit.
Lighthizer told members of Congress the US is looking to put “maximum pressure on China and minimum pressure on US consumers” and that “China’s state-led, market-distorting efforts to force, pressure, and steal US technologies and intellectual property,” would no longer be tolerated.
An investigation under Section 301 of America’s 1974 Trade Act has identified theft from and coercion of US companies to disclose their intellectual property, as well as purchases by Chinese state funds of US companies for their knowledge.
A US trade official told reporters the US has evidence that China requires firms to create local partnerships to enter the Chinese market, as a way of pressuring them into technology transfer, and that China conducts and supports cyber attacks.
“The US side has violated WTO rules [and] repeatedly abused trade remedy measures, which has seriously damaged the fair and just nature of the international trade environment”
Also on Wednesday, however, the US received a rebuke from the World Trade Organization, which said that Washington had not fully complied with a 2014 ruling against its anti-subsidy tariffs on various Chinese products ranging from solar panels and wind towers to steel cylinders and aluminum extrusions.
China’s commerce ministry responded by saying that the judgment “proves that the US side has violated WTO rules [and] repeatedly abused trade remedy measures, which has seriously damaged the fair and just nature of the international trade environment, and weakened the stability of the multilateral trading system.”
In its statement on Thursday, the ministry added that “with regards to the Section 301 investigation, China has expressed its position on many occasions that we resolutely oppose this type of unilateral and protectionist action by the US. China will not sit idly by while legitimate rights and interests are hurt. We must take all necessary measures to firmly defend our rights and interests.”
The US runs a hefty goods trade deficit with China of US$375 billion. The cost to the US of counterfeit goods, pirated software and theft of trade secrets could be as high as US$600 billion, according to one study.
Talk of a global trade war emerged earlier this month when Trump announced hefty tariffs on steel and aluminum imports. Although aimed at hitting Chinese overproduction, these could also affect key allies including members of the European Union.
Lighthizer conceded that China would likely hit back with measures on US agricultural exports, particularly soybeans. He said that, in such an eventuality, Washington would impose “counter-measures.”
On Wednesday Federal Reserve Chairman Jerome Powell warned that the prospect of a trade war was a growing threat to the US.
With additional reporting from Reuters.