It seems a trade war is brewing between the two largest economies in the world, with the United States and China embroiled in a tit-for-tat tariff battle. Next in Trump’s sights is China’s technology industry, with his administration expected to reveal a list of the annual imports next in line to receive the new charge by Friday.
The list is said to be worth approximately $50 to $60 billion, comprised of “largely high-technology.” Although the list is set to be unveiled on Friday March 22nd, it could take a further two months for any tariffs to come into place thanks to a negotiated settlement period.
The US Trade Representative’s (USTR) office states that this is in response to Beijing’s “uneconomic” technology transfer policies that have previously seen United States intellectual property handed over to Chinese companies through joint venture requirements, reportedly unfair technology licensing rules, the use of state funding in purchasing U.S. technology firms and alleged outright theft.
China has denied the allegations and has since threatened retaliation in the form of tariffs of its own. These are far from empty threats, with the two economic powerhouses already taking pot shots at one another, starting with the US implementing a tariff on aluminium and steel last month and China hitting back with and extra 25 percent on U.S. products including frozen pork, wine, fruit and nuts on Sunday.
While this is just the icing on the cake of what seems like a long trade war, the USTR justifies the Chinese technology tariff by claiming that it helps the US keep its technological edge and quells Beijing’s “Made in China 2025” program. This is a plan that sees China replacing imports in 10 industries by upgrading its domestically manufactured products, including that of advanced information technology, robotics and advanced materials.
According to former deputy USTR Wendy Cutler, the 60-day negotiated settlement period is likely not enough for China to address the allegations, let alone make the significant changes that the US requires to stop the tariffs being put in place.
KitGuru Says: None of this is good for US residents, who will inevitably see the costs fall on them regarding whatever item is caught under the new tariff. Hopefully, the US and China will reach an agreement before it comes to this, although this is looking increasingly unlikely.