As the administration ratchets up Section 301 tariffs on China, it appears it is directing less attention to the overarching goal of balancing the trade relationship, a witness said.
The Trump administration is becoming so focused on the unilateral tool of tariffs that it is losing focus on the overall goal of U.S.-China trade talks, Center for Strategic and International Studies senior adviser Scott Kennedy said Tuesday.
The Trump administration announced last month that 10% tariffs across $200 billion worth of goods from China in 2017 import value will increase to 25%. That increase is set to take effect on June 15, according to the Office of the U.S. Trade Representative. The administration also is collecting 25% tariffs across another $50 billion worth of goods in 2017 import value and announced last month that it intends to start the process for imposing Section 301 tariffs on the remaining un-tariffed goods from China, covering about $300 billion worth of goods in yearly import value.
The outcome of trade talks shouldn’t be bilateral disengagement and moving forward with a new Cold War, but should level the playing field and find a way for the U.S. and China to “peacefully coexist,” Kennedy said during a Senate Banking Committee hearing on confronting threats from China.
“The strategy of only relying on unilateral pressure is causing a lot of collateral damage in the United States and elsewhere,” he said. “We should stop bashing our allies, threatening tariffs with them [and] collaborate with them.”
The U.S. can’t significantly isolate China without help from U.S. allies, Kennedy said.
Laying out the context of U.S.-China talks, Sen. Bob Menendez, D-N.J., criticized President Donald Trump’s plans to impose tariffs on all goods from Mexico starting Monday as a tactic aimed to pressure that country to stop the flow of illegal migrants to the United States.
“As we’re trying to deal with China and its unfair trade practices, what message does that send to China, that even if they strike a deal with us, and the president goes ahead and says, ‘Well, I’m going to strike tariffs on you for some other reason’?” Menendez said.
China wants a deal because it thinks it will stabilize the bilateral relationship, but won’t want a deal if it thinks, on day two, that the U.S. is going to break commitments, Kennedy said.
“They also feel that if we’re isolated because we’re hitting everyone else with tariffs and penalties, that it’ll be us that are isolated at the end of this and they’ll just wait out the president until the next administration,” Kennedy said.
He said the trade war is an “annoyance” for China, but it is not stopping Beijing from pursuing goals such as Made in China 2025, a comprehensive national investment plan aimed at positioning the country as a global leader in cutting-edge technology production.
“They’ve got plenty of money and they haven’t been fully disengaged from the global economy,” Kennedy said. “Certainly, globalization is central to their success. They can’t do this all by themselves.”