The U.S. and China are inching ever closer to a full-out trade war.
After Chinese tariffs of up to 25% on 128 U.S. goods, including wine, fruits, nuts, and frozen pork, went into effect Monday, Trump is this week expected to further specify the tariffs on $60 billion of annual imports of Chinese goods that he first announced on March 22.
While China’s tariffs primarily punish American foods, new American restrictions on Chinese imports are expected to focus on the technology sector, and specifically on goods in which the Chinese government has expressed a strategic interest through its “Made in China 2025” program. These include advanced information technology, robotics, and pharmaceuticals, among other strategic industries.
The China-specific tariffs are a response to what the Trump administration calls intellectual property theft, via technology transfer policies that require companies to share technology with Chinese firms in order to do business in China. The Trump administration claims these rules are unfair and have allowed the Chinese government to misappropriate American technology.
But announcing new technology tariffs could in turn push China to tax American firms such as Apple that rely on Chinese manufacturing to keep their costs low.
Trump is not the only American politician pursuing tariffs on Chinese goods. Democratic Senator Elizabeth Warren, not usually known to agree with the president, said in Beijing over the weekend that she was not afraid of tariffs, and that U.S. policy towards China had been “misdirected” for decades.
There might be some light at the end of the tunnel: Chinese officials have urged trade talks in recent weeks in order to avoid an all-out trade war. But with no response from the U.S. government, the window to avoid a damaging conflict might be closing.
