Hits and Misses in Trump’s New China Trade Policy

COMMENTARY Trade

Hits and Misses in Trump’s New China Trade Policy

Apr 2nd, 2018 2 min read

Commentary By

Tori K. Whiting

Jay Van Andel Trade Economist

Alexander Miller

Spring 2018 member of the Young Leaders Program at The Heritage Foundation

The president recently announced a three-pronged strategy to target China for its alleged “unfair trade practices.” CHINE NOUVELLE/SIPA/Newscom

Key Takeaways

History shows that when proper channels at the World Trade Organization are utilized, China modifies its behavior.

Pressuring China to the negotiating table with broad tariffs will harm Americans more than it will hurt China.

The Trump administration and Congress should work together to utilize trade tools, such as the World Trade Organization and the Committee on Foreign Investment.

The president recently announced a three-pronged strategy to target China for its alleged “unfair trade practices.”

This new strategy includes challenging Chinese intellectual property practices at the World Trade Organization, further restricting Chinese investment, and imposing tariffs on consumer goods from China.

The administration’s approach represents a combination of good policies that will minimize harm to American businesses, farmers, workers, and families, as well as policies with good intentions that could have serious negative consequences.

America’s track record at the World Trade Organization is nearly perfect. In fact, the United States has won every case against China since 2004. President Donald Trump’s chief trade negotiator filed a consultation request with the World Trade Organization regarding “China’s discriminatory licensing practices.”

This could be a long process for the White House, but history shows that when proper channels at the World Trade Organization are utilized, China modifies its behavior. Since cases almost always weigh in our favor, the administration should continue to pursue these disputes.

Trump also asked the Treasury Department to propose ways in which it can further block Chinese investments in U.S. technologies. Fortunately, for the last year, Congress has been working to reform the Committee on Foreign Investment in the United States, the entity responsible for reviewing investment for national security concerns.

The White House’s efforts in this area are valid, but it should focus on working with Congress to make the necessary legislative changes rather than allowing Treasury to solely take the reins.

While the first two strategies against China are somewhat in the correct direction, the consideration of tariffs on Chinese imports will only harm American businesses, farmers, workers, and families. History reveals that tariffsincrease the price of imported goods, forcing American businesses and consumers to pay more than they would otherwise pay.

Trump’s proposed China tariffs should not be considered “good policy.” In fact, they should be avoided at all costs, as tariffs often lead to a tit-for-tat with trading partners. Pressuring China to the negotiating table with broad tariffs will harm Americans more than it will hurt China.

Instead, the Trump administration and Congress should work together to utilize trade tools, such as the World Trade Organization and the Committee on Foreign Investment in the United States, to improve trade between the American and Chinese people.

This piece originally appeared in The Daily Signal