Politicians, economics and business executives agree China isn’t playing fair on trade.
But there’s a lot of disagreement about whether the hefty tariffs that President Donald Trump took initial steps toward imposing Thursday are the right weapon for fighting back.
American farmers and Walmart shoppers are likely to feel pain in this fight, and a lot of them voted for Trump.
“I’m a farmer from Iowa and someone is messing with my biggest market. That’s frustrating,” said John Heisdorffer, a farmer in Keota and president of the American Soybean Association. “We send $14.6 billion in soybeans to China, equivalent to nearly one in every three rows of beans we grow, and more than the rest of the world combined.”
A presidential memorandum signed Thursday by Trump will target up to $60 billion in Chinese goods with tariffs over what his administration says is misappropriation of U.S. intellectual property. An eight-month investigation determined China forces American investors who want to do business there to turn over key technologies to Chinese firms.
But the tariffs would start only after a 30-day consultation period that starts once a list of targeted goods is published.
Trump also gave the Treasury Department 60 days to develop investment restrictions aimed at preventing Chinese-controlled companies and funds from acquiring U.S. firms with sensitive technologies.
The waiting periods give lobbyists and lawmakers a chance to water down a proposed target list that runs to 1,300 products, many in technology sectors.
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But watered down or no, a belligerent China promised a “fight to the end” and said it had found 128 U.S. products to penalize — including the Iowa staples of soybeans and hogs.
“We will retaliate. If people want to play tough, we will play tough with them and see who will last longer,” Chinese Ambassador Cui Tiankai said in a video on the embassy’s Facebook page.
There are two ways Americans are likely to get hurt in a U.S.-China trade spat.
First, prices on a lot of items Americans buy will almost certainly rise. In many stores, “Made in China” labels plaster T-shirts, shoes, plastic Easter eggs and water bottles, among many, many other goods.
Tariffs are basically taxes that mean Americans will pay more when they shop. That’s especially true for low-income families who spend a higher share of their paycheck on goods, and often buy the cheapest products available.
“Lots of stuff we import from China is for the Walmart shopper,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics.
Top retailers from Walmart to Apple have sent letters to Trump urging him not to do this because it would worsen inequality and “punish American working families with higher prices.”
The second way Americans stand to get hurt is expected to come when China fights back.
All indications from Beijing are that China’s counter-tariffs will target goods and jobs in parts of America that voted for Trump. At the top of China’s hit list are agricultural products. Soybeans and grains are the second largest U.S. export to China.
“There is virtually certain to be Chinese retaliation aimed largely on U.S. agriculture,” said Greg Valliere, chief global strategist at Horizon Investments. “Most of Trump’s policies hurt his base, and this could be a real problem in places like the Midwest.”
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Iowa Sen. Chuck Grassley announced Thursday he’ll be among four other Republican senators headed on a trip to China, South Korea and the Korean Demilitarized Zone. His office said the trip had been in the works for months.
In a news release, the delegation said its trip would “address issues important to the United States including trade, intellectual property, technology, security and human rights.”
In signing the memorandum Thursday, Trump said it was “the first of many.”
He and his advisers argue that even if consumers have to pay more for goods from China, it’s worth it because that would save U.S. jobs.
“It’s important to put this action in context. As a practical matter, China benefits far more from the U.S.-China trade relationship than the U.S. does,” said Peter Navarro, a senior Trump adviser. “The trade deficit results in 2 million more jobs in China and 2 million less here.”
The Washington Post and Reuters contributed to this report.