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Are Tariffs The Best Way To Force China To Change Its Ways?

Mar 26, 2018
Originally published on March 26, 2018 8:49 pm
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The U.S. and China are reportedly in talks in hopes of preventing a trade war. Last week, President Trump said he would levy $60 billion worth of tariffs against China for its predatory trade practices. Some analysts say there are other ways to force Beijing to change its ways. NPR's Jackie Northam reports.

JACKIE NORTHAM, BYLINE: No one should have been surprised that President Trump made an aggressive move when it came to China. He had been complaining about the U.S. trade deficit with China since the early days of his presidential campaign. Ely Ratner, a China specialist at the Council on Foreign Relations, says Trump is sick of Beijing making empty promises to curb 20 years of trade abuses.

ELY RATNER: Including state subsidies that unfairly lower prices and result in dumping cheap products in the global markets, forcing U.S. companies to transfer technology, forcing U.S. companies to engage in joint ventures with Chinese firms, and straight-up theft of intellectual property.

NORTHAM: The tariffs are viewed as a way to correct that behavior. Still, Ratner says threatening to levy 25 percent tariffs on Chinese goods risks the chance of a devastating trade war. Ratner says there are a number of trade remedies that could be given time to work before imposing stiff tariffs. One way is by limiting Chinese investment in the U.S.

RATNER: Congress is working in parallel here shoring up what is known as CFIUS, the Committee on Foreign Investment in the United States, to provide more careful screening on Chinese investments in the United States. I think that's well thought out.

NORTHAM: There's also the World Trade Organization. Trump says the U.S. will file a suit with the WTO to challenge China's discriminatory technology practices. Michael Pillsbury, director of the Center for Chinese Strategy at the Hudson Institute, says there are other tools at President Trump's disposal such as reaching out to people in the Chinese government advocating for change.

MICHAEL PILLSBURY: We identify the economic reformers in the government and think tanks and support their proposals for reform. They've gone pretty far. And the irony is that the special envoy President Xi Jinping sent just a few weeks ago to Washington - the president declined to meet with him.

NORTHAM: There have been two decades of negotiations that have stalled or proved fruitless. Jeff Schott, a specialist on international trade at the Peterson Institute for International Economics, says Trump's actions last week were meant to provoke, but also could provide an opportunity for meaningful talks where the U.S. would have the upper hand.

JEFF SCHOTT: Meaning that China would come forward with concessions while the United States would not. The U.S. concession would be to withhold or modify the punishment.

NORTHAM: Schott says U.S. leverage could be ratcheted up during the negotiations as the Trump administration draws up its list of products that will be subject to punitive tariffs. The Wall Street Journal says already on the table are a possible tariff cut on U.S. autos, more American-made semiconductors and better access for U.S. firms to the Chinese financial sector. Jackie Northam, NPR News, Washington.

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