Trump plans to announce steel tariffs, but may allow exemptions for U.S allies after all

Don Lee, Tribune Washington Bureau on

Published in Business News

"The Chinese are trying to play the long game, whereas the EU and allies are frustrated," said Andy Rothman, a former economic officer at the U.S. Embassy in Beijing and now an investment strategist for Matthews Asia in San Francisco. "Their rhetoric was quite calm and restrained," he said, although prior to the tariff announcement, Beijing sent a warning that U.S. protectionist measures could be met with limits on American imports of sorghum and other farm goods to China.

In the last year, the administration has issued anti-dumping and illegal subsidy duties on individual Chinese products, as it has on those of other countries. Trump has also opened an investigation into China's theft of intellectual property and forced technology transfer, which could result in significant punitive actions such as large tariffs or restrictions on imported electronics from China.

But many viewed across-the-board tariffs as a blunt instrument that would miss the target and undercut a united front with allies to tackle the problem. In short, analysts said, with the proposed tariffs, Trump was picking a fight with the very people he needed to help him pressure China.

"It seems to almost target our friends more than China," said David M. Lampton, director of China studies at the Johns Hopkins School of Advanced International Studies in Washington.

Lampton saw the tariffs as particularly ill-timed and counterproductive because the United States, along with others in the West, have undertaken a broad reassessment of their approach to China after Beijing's retreat from a 2013 pledge to liberalize its markets and aggressive actions in the South China Sea and at home to snuff out dissent.

Even as Trump himself has sent conflicting messages on China, excoriating Beijing on trade while praising Xi and his bid to eliminate term limits, the Trump administration has singled out China, along with Russia, as a major threat to American security and prosperity.

Before, the posture of the U.S. and many of its allies was largely to co-opt China into the global system on the presumption that its development would lead to a convergence with democratic institutions and open markets styled in the West. The American strategy had earlier sought to divide Russia and China in ways that might be in the U.S. national interest, Lampton said.

"It seems to me that we have an overall national strategy that takes China and Russia to be co-equal, big-power competitors, (but) we're alienating all the allies we need to deal with it," he said. "What I see is this tariff thing comes in the context of redefining the era where we need friends."

China experts said the Obama administration had pressed Beijing to open China's financial services market, among other areas, only to see Chinese leaders drag their feet. Trump had said he would treat China more lightly on trade if Beijing cooperated with the U.S. in pressuring North Korea to rein in its nuclear program. The Chinese have helped but not as much as Trump has wanted.

"There are a lot of areas Beijing has not done what it's supposed to do," Rothman said. "The question is, what's the right mechanism for that? And going after steel and aluminum is not it. That's not really where we will make the most gains that benefit most Americans."

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