Risky New Tariffs on China
The President’s Risky Trade Plan
Last week, President Trump announced plans to impose punitive tariffs on a wide range of products manufactured or assembled in China. In doing so the president brashly dismissed concerns about the risk of provoking a trade war with China. While specifics won’t be published for 15 days, the White House plan envisions steep tariffs on up to 1300 different products that benefit from unfair Chinese trade policies. The targets will likely include computers, electronics, and communications equipment, but could reach a far broader array of consumer products. The President also directed the Treasury to impose restrictions on Chinese investment in U.S. companies.
American business leaders, U.S. trading partners, editorial writers, and investors – who saw the DOW drop more than 1000 points since word of the President’s plan was released – were among those deeply critical of the tariff announcement. Many are calling it equivalent to dropping an economic nuke.
Right on the problem; wrong on solution
We DO need to push back hard against Chinese cybertheft, forced transfer of valuable technology, and trade practices that violate international agreements. But, unilateral action centered on extensive, punitive tariffs is more likely to be dangerous than it is to be successful. Tariffs are effectively taxes on trade that will be passed on to consumer purchases. As a result, this tariff plan isn’t likely to hurt China as much as it will hurt American shoppers and exporters.
Many worry that the president’s plan takes us down on a path to a trade war. Neither country would benefit from that; however, China has already hinted that it stands ready to impose targeted retaliatory tariffs. They specifically cited soybeans, our largest agricultural export. China could also make it even more difficult for U.S. businesses to enter chinese markets.
How This Affects Ohio
Trade experts and China-watchers warn that the President’s path invites retaliation. But it wouldn’t take an all-out China-U.S. trade war to cause pain here in Ohio. Take just one example: Soybeans! They’re a big crop in Ohio AND in this congressional district. Hundreds of thousands of acres of soybeans were harvested in our own 4th congressional district of Ohio last year. China has already signaled that soybean exports are in their bulls-eye. Here’s why: China is the No. 1 importer of U.S. soybeans and related products, with roughly 1 in 3 rows of beans grown on U.S. farms going to China, according to the American Soybean Association. But China isn’t dependent on us! It could buy soybeans from Brazil if it chooses to slap tariffs on the U.S. in retaliation for the president’s plan. China’s leaders are also aware that the leading soybean-producing states in the U.S. voted overwhelmingly for Donald Trump in 2016. As a result, they’ll likely impose a tariff on this key crop to inflict pain on the president.
Let’s solve the problem, not create new ones
China’s predatory trade practices DO hurt the U.S. economy, and DO pose a threat to our leadership in technology and our security. So we must take strong action! But we’re stronger when we work with the many other countries hurt by China’s trade violations and piracy. As a world leader, we must organize a group of nations to jointly pressure the Chinese to adhere to fair trade norms. Collectively, we should use and strengthen institutions like the World Trade Organization to back up our demands, and collectively adopt and enforce sanctions, which could include carefully targeted tariffs against China, if China fails to comply.
But the President isn’t listening. He’s surrounded himself with yes-men, and blindly ignores the danger. Our system of government, of course, has an institution to check a President bent on a reckless shoot-first-negotiate-later strategy: our Congress!
Congress ought to step in and push back against this sweeping, unilateral tariff plan, and against the President’s wrongheaded view that international trade is a zero-sum competition. This is a critical moment for Congress to insist on a comprehensive strategy to fight Chinese predatory practices. This should include encouraging the engagement of the international community, and both enforcing and strengthening the rules of world trade. Unfortunately, under current leadership, and with members like our own Jim Jordan, this Congress has been unwilling to stand up to this President. It’s time for change!