By William Mauldin
WASHINGTON -- President Donald Trump escalated a trade conflict
with China Monday, asking his administration to identify a new list
of $200 billion in Chinese goods that would be penalized with
tariffs.
The move followed tariffs applied last week on $50 billion in
Chinese imports to the U.S., designed to punish China for unfair
trade practices. Beijing immediately threatened to retaliate with
its own equivalent tariffs on U.S. goods.
In a statement late Monday, Mr. Trump said that he now wants
U.S. Trade Representative Robert Lighthizer to identify a second
tranche of goods imported from China for tariffs of 10%.
Should China retaliate to those additional tariffs, Mr. Trump
promised to escalate even further by placing tariffs on another
$200 billion in Chinese goods.
The announcement came hours after the Senate delivered an
unusual rebuff to his trade policies, passing a measure reinstating
a ban on purchases of U.S. components by Chinese telecommunications
company ZTE Corp that Mr. Trump had sought to overturn.
"Further action must be taken to encourage China to change its
unfair practices, open its market to United States goods, and
accept a more balanced trade relationship," Mr. Trump said in the
statement.
The president boasted Monday of his "excellent relationship"
with Chinese President Xi Jinping, and said the two would continue
working together on many issues.
"But the United States will no longer be taken advantage of on
trade by China and other countries in the world," he said.
Some of the first tranche of tariffs, aimed at $50 billion in
imports from China and designed to punish Beijing for alleged
intellectual-property violations and technology theft, will be
implemented July 6 and will add 25% to the price of goods at the
border. Beijing said Friday it would retaliate in kind by targeting
high-value American exports -- including farm products, cars and
crude oil.
The quick response from Beijing appeared to provoke Mr. Trump,
who says U.S. tariffs are meant to right the wrongs he says the
U.S. has suffered in the global trading system under previous
administrations.
"This latest action by China clearly indicates its determination
to keep the United States at a permanent and unfair disadvantage,"
he said, calling Beijing's response "unacceptable."
A third round of tariffs would bring the total imports from
China subject to U.S. tariffs to $450 billion, almost as much as
the $505 billion in goods that the U.S. imported from China last
year.
By comparison, China only imported $130 billion in American
goods last year, giving Beijing less room to target trade volumes
coming from the U.S. than Mr. Trump does in shipments from
China.
"Mr. Trump seems to be taking the view that China's room to
retaliate against U.S. tariffs is limited by the fact that the U.S.
imports far more from China than it exports to that country," said
Eswar Prasad, an international trade professor at Cornell
University. "This could prove to be a dire miscalculation since
China could quite effectively hurt American businesses in other
ways, including by limiting their sales operations in China and
overtly or covertly disrupting their supply chains."
Business groups and traditional Republicans who back free trade
are likely to criticize the new tariff plans. Still, the move may
be popular among backers of Mr. Trump who are skeptical of previous
administrations' free-trade bent.
Mr. Trump "has shown that he's not prepared to tolerate China's
escalation of this," said former White House chief strategist Steve
Bannon. "He could not have had a more aggressive response to
this."
It wasn't immediately clear how long Mr. Lighthizer's office
would take to identify the new imports subject to tariffs. So far
the tariffs aimed at China through a trade law known as Section 301
have been developed in a process that includes opportunities for
public comment and hearings in Washington.
"The initial tariffs that the president asked us to put in place
were proportionate and responsive to forced technology transfer and
intellectual property theft by the Chinese," Mr. Lighthizer said in
a statement Monday, confirming that his office is preparing to
identify imports for the new round of tariffs.
"It is very unfortunate that instead of eliminating these unfair
trading practices China said that it intends to impose unjustified
tariffs targeting U.S. workers, farmers, ranchers, and
businesses."
The Trump administration sought, in its initial tranche of 25%
duties on Chinese goods, to avoid consumer items or other products
that could hurt Americans at the checkout counter, and flat-screen
televisions were excluded from the finalized tariffs last week.
Avoiding retail goods may prove harder as the amount of imports
rises in the current fight with China.
"This is a global trade war, plain and simple, and the American
families will be the ones who suffer most," said Hun Quach, vice
president at the Retail Industry Leaders Association, a trade
group.
Mr. Trump's tariffs on Chinese-made goods, as well as on steel
and aluminum tariffs from around the world, are prompting increased
concern from businesses and Republican lawmakers. Many Democratic
lawmakers applaud the use of tariffs as a tool to rein in China's
behavior but fault Mr. Trump for a "chaotic" policy.
The duties are kicking off trade conflicts from the European
Union to Canada, and so far the Trump administration hasn't
announced any major new deals won with the threat of tariffs. At
times, Mr. Trump has used national-security laws to impose tariffs,
leading to challenges at the World Trade Organization.
Not all of Mr. Trump's warning of tariffs have translated into
U.S. policy, and the president has frequently shifted gears.
Previously Mr. Trump had said that retaliation from China on the
first $50 billion in U.S. tariffs would lead to an additional $100
billion in goods targeted by the U.S., but on Monday he said the
next step would be for $200 billion.
On the Senate ZTE vote, Mr. Trump is expected to turn his
attention to persuading congressional negotiators to strip out the
ZTE sales ban from a larger, must-pass defense bill, as they
reconcile competing House and Senate versions of the
legislation.
Mr. Trump had personally negotiated with Mr. Xi, the Chinese
president, to get ZTE back in business by overriding an earlier
decision by his own Commerce Department to block sales to the
telecom company.
ZTE has repeatedly violated U.S. sanctions, the Commerce
Department says. U.S. intelligence officials also have also long
warned that its equipment could be used to spy on Americans. The
company has denied the accusation.
A spokesman for the Chinese Embassy in Washington didn't
immediately return a request for comment on the White House tariffs
plan.
--Peter Nicholas, Siobhan Hughes and Kate O'Keeffe contributed
to this article.
Write to William Mauldin at william.mauldin@wsj.com
(END) Dow Jones Newswires
June 18, 2018 22:36 ET (02:36 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.