President Trump is regarded as a protectionist with a limited appetite for global trade and the regulations which underpin it. He has made much of an “America First” policy which plays well with his domestic support base but raises concerns around the world.
The most recent initiative in Trump’s America First drive is his proposal to levy $60 billion worth of tariffs on Chinese goods. The move will be accompanied by restrictions on Chinese investments in the US. The justification given for the policy is alleged intellectual property theft from US companies and unfair competition practices. The US claims that Chinese policies prevent foreign ownership of Chinese businesses and that foreign businesses are compelled to transfer technology to Chinese partners. Other allegations suggest that Chinese investments in the US are targeted on strategic industries and that China conducts and supports cyber attacks on US concerns. Naturally, China refutes the US allegations and has threatened retaliatory measures
US proposals list 1000 products which could be targeted for a levy of a 25% tariff, subject to discussions with US stakeholders. Of course, a tariff means (in this case) that US consumers wishing to buy a Chinese product will have to pay more to obtain it. The intention of a tariff, therefore, is to give competitive advantage to domestic products (which is fine if there are domestic alternatives of suitable quality, but Brexiters in fail to understand that application of tariffs on goods that they want just makes them costlier).
The Chinese commerce ministry released a defiant statement: “China will not sit idly by and let its legitimate rights and interests be harmed and will certainly take all necessary measures to resolutely defend its legitimate rights and interests”.
Stock markets have fallen in response to the opening skirmishes in this latest putative Trumpian trade war since Chinese retaliation will harm US exports to China and may result in additional barriers to trade being erected.