Trump administration's tariffs on China are doomed to hurt U.S.

By Lei Sihai, translated by Liang Wenxi

This morning, the office of the United States Trade Representative released on its website a draft list of about 1,300 goods imported from China that could be subject to an additional 25 percent tariff, valued at about 50 billion U.S. dollars. The proposal includes a bargaining period of 60 days: if China and United States fail to settle their trade disagreement, a final list will be issued and the tariffs implemented.

Excerpt of the website of the office of the United States Trade Representative [Photo: WeChat account of huanqiuruiping]

According to the U.S. Trade Representative, the list is the product of a powerful algorithm designed to hit China's exporters hard while providing the most protection to the interests of U.S. manufacturers. They failed to mention that the real purpose of the list is to constrain the development of China's high tech manufacturing industry, or that it is a maneuver by the Trump administration to achieve so-called "fairer trading relations". Looking at the list, you get the feeling that the moves proposed by the United State are futile and will benefit no one.

The list of goods can be divided into several categories. First, goods that China produces but that it would be better off not selling to the United States. Second, goods that China only exports in small quantities to the United States. Third, necessities the United States doesn't produce, or only produces in small quantities. And fourth, goods that are in huge demand worldwide.

List of goods imported from China that could be subject to an additional 25 percent tariff [Photo: WeChat account of huanqiuruiping]

Products listed like thorium alloy, depleted uranium alloy, high temperature ceramics, and some radioactive compounds are things that China shouldn't be selling to the United States. Thorium can improve the strength and heat resistance of metallic alloys. It can be used in the aerospace industry to make rockets and missiles, and in special welding and electronic components. And the uses for depleted uranium are widely understood. Aside from the uses of these materials, pollution resulting from their production means they should be stringently controlled and managed. And, as China develops, there will be growing domestic demand for these materials. Therefore, additional tariffs on these goods may not be a bad thing.

As for steel and aluminum, China need not worry, as it isn't a major exporter to the U.S. Sanctioning China is far from enough if the Trump administration wants to secure its political base and protect its domestic metals industry. On the contrary, major exporters that should be sanctioned have been exempted from U.S. tariffs. It is understandable that Trump wants to unite with his allies to wage a trade war against China. 

President Donald Trump signs a presidential memorandum imposing tariffs and investment restrictions on China in the Diplomatic Reception Room of the White House, March 22, 2018, in Washington. [Photo: AP/Evan Vucci]

Mechanical and electrical goods are also included in the list, some of which are necessities for the American people. Small generators, electric tools, and small processing machines are in huge demand and are essential. However, the United States doesn't have many domestic manufacturers of these goods, so the domestic versions come with a high price tag. The move by the United States to get China out of the market for these goods could lead to two outcomes. First, these products will continue to flow into their market from other countries, so local manufacturers won't get the benefit. Or second, if the United States shuts the door to imports of these goods from other countries, Americans will be forced to buy the higher-priced domestically produced versions. Either way, Trump's measures will make these products less affordable, especially for Americans in the middle and lower classes.

If the United States includes CNC machine tools, industrial robots, lithium batteries, and spare parts for New Energy Vehicles in the list, this approach would immediately raise manufacturing costs in the United States. Without the availability of lower cost imported products like these, the cost of their domestically produced products would go up and American manufacturers would become less competitive. That's what happens when a country sacrifices its long-term strategic interests for short-term goals.

As for the fourth category of goods, which includes the large quantity of profitable chemical products and biological preparations the United States imports from China, these are used to the benefit of American manufacturers. But there is also huge demand in the global market, so if it is facing a decline in the American market, China can focus its attention elsewhere.

Photo taken on April 4, 2018 shows the entrance to the Chinese Ministry of Commerce (MOC) in Beijing, capital of China. China strongly condemns and firmly opposes the United States tariff proposals and is ready to take countermeasures on U.S. products, the MOC said Wednesday. [Photo: Xinhua]

China's Ministry of Commerce recently responded to United States sanctions on China's steel and aluminum goods, saying that China is ready to take reciprocal measures of similar strength and scale towards imports of goods from the United States, according to the Foreign Trade Law of the People's Republic of China. These measures will be released soon. According to speculation, China's countermeasures could be a blow to the United States that will not only reinforce that country's current economic problems, but also shake the political base of the Trump administration.

In short, Trump's move seriously violates the basic principles and spirit of the World Trade Organization, ignores 40 years of mutually beneficial win-win trade cooperation, and ignores the interests of industry and consumers alike. It will do no good to the national interests of China, the United States, or anyone else. His plan is a bad one. Is it a reasonable explanation that the algorithm of the United States Trade Representative dislikes the president as much as the American media?