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Trump punishes China on trade but lifts steel tariffs for allies

  • Author: Mark Landler, Jim Tankersley, The New York Times
  • Updated: March 22, 2018
  • Published March 22, 2018

President Donald Trump departs after announcing about $60 billion worth of annual tariffs on Chinese imports, at the White House, March 22, 2018. The administration action was a move to punish China for what it says is a pattern of co-opting American technology and trade secrets. (Doug Mills/The New York Times)

President Donald Trump said he would impose about $60 billion worth of annual tariffs on Chinese imports Thursday as the White House moved to punish China for what it says is a pattern of co-opting U.S. technology and trade secrets and robbing companies of jobs and billions of dollars in revenue.

The measures come as the White House grants a long list of exemptions to U.S. allies from steel and aluminum tariffs that go into effect Friday, including the European Union, which has lobbied aggressively and publicly for relief from the trade action.

"The word that I want to use is reciprocal," Trump said in announcing the tariffs in the Diplomatic Room of the White House. "If they charge us, we charge them the same thing."

The China tariffs are his strongest trade action yet against a country he has branded an "economic enemy." They fulfill one of his core campaign pledges, to demand more reciprocal deals with trading partners around the world.

But coupled with the administration's decision to exempt the European Union, South Korea, Brazil, Canada, and Mexico from the tariffs on cheap metals, the action demonstrates how much Trump's nationalist trade agenda is really targeted at a single country: China.

"What the United States is doing is strategically defending itself from China's economic aggression," said Peter Navarro, director of the White House National Trade Council and an architect of the measures. "We repeatedly aired our concerns about China as a nonmarket economy."

The tariffs, which the U.S. trade representative will publish within 15 days, will target 1,300 lines of Chinese goods — everything from shoes and clothing to electronics, administration officials said.

Trump, the officials said, will also direct the Treasury Department to impose restrictions on Chinese investment in U.S. technology companies — a practice that they said the Chinese government uses to develop its own "national champions" in cutting-edge industries such as artificial intelligence and autonomous vehicles.

Robert Lighthizer, the U.S. trade representative, told the Senate Finance Committee on Thursday that he had recommended the forthcoming actions against China include tariffs on Chinese products from all of the advanced industries the country has vowed to build up as part of its "Made in China 2025" plan. Those industries include electric vehicles, high-tech shipping and aerospace technology. Lighthizer called them "the ones I care about" for tariff purposes.

"The end objective of this is to get China to modify its unfair trade practices," Everett Eissenstat, deputy director of the National Economic Council, said in a telephone call with reporters.

Navarro cast the tariffs as part of a seminal shift in how the United States views China. Rather than trying to draw it into the rules-based international economic order — a policy that dates back to Richard M. Nixon and Henry Kissinger — the United States now regards China as a strategic competitor, bent on eroding U.S. security and prosperity.

But the moves come at a time when Trump has enlisted President Xi Jinping of China to help pressure North Korea over its nuclear and ballistic missile programs. Last year, Trump said he had decided not to designate China as a currency manipulator, in part because China was cooperating in the pressure campaign.

Trump's explicit linkage of trade and security raises questions about whether the tensions from these tariffs will spill over into the North Korea issue.

The prospect of growing trade tensions between the world's two largest economies spooked global financial markets.

The Stoxx Europe 600 index fell by nearly 2 percent. Germany's DAX fell by more than 2 percent as investors digested the threat to the country's export-driven economy. In the United States, the S&P 500 index dropped by more than 1.5 percent.

Boeing, one of the United States' largest exporters, declined 3.8 percent. Money flowed to government bonds as investors sought safety, briefly driving yields on the benchmark 10-year Treasury note down below 2.8 percent. Yields move in the opposite direction of bond prices. Crude oil futures slipped 0.8 percent.

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