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Why Trump's tariffs are one of the last big obstacles in U.S.-China trade talks

Don Lee, Los Angeles Times on

Published in Business News

WASHINGTON -- The United States and China are in the final stretch of talks to resolve a conflict over American complaints about China's unfair trading and economic practices.

Senior U.S. officials say they have reached agreement on enforcement and other key elements of the dispute, raising the possibility that President Trump and Chinese President Xi Jinping could sign a deal in late May.

But at least one big sticking point remains: what to do with all the tariffs that the two sides slapped on each other in the last year. China wants the duties to be lifted. The United States wants to leave at least some of these taxes on Chinese goods in place.

Failure to come to terms on this issue could doom the deal. One thing is certain: It's in Trump's hands. And as he has throughout the negotiations, the self-described "Tariff Man" is keeping the world guessing.

Why does Trump love tariffs so much?

Past American presidents typically embraced tariffs for one of three reasons: to raise government revenues; to protect a domestic industry; or to press for reciprocity from a trading partner.

 

For Trump, it's all three -- and more. He sees the imposition of tariffs, or the threat of them, as leverage to force countries to the table and to make concessions. In Trump's world of deal-making, tariffs are the weapon of choice, and unlike any U.S. leader in modern times, he has employed them against adversaries and allies alike.

For Trump, tariffs are a win-win because the U.S. government either gets a better deal or collects the revenue, says Douglas Irwin, an economic historian at Dartmouth College. "It's all good" to him, Irwin said.

What tariffs have the U.S. and China placed against each other?

After his administration concluded that China's behavior on technology transfer and intellectual property had been harmful to the United States, Trump fired the first big salvo in mid-June 2018. He imposed 25 percent tariffs on $34 billion in Chinese industrial machinery, electronic equipment and other goods. Beijing immediately retaliated, dollar for dollar, slapping 25 percent duties on U.S. soybeans, seafood and electric vehicles, among other products.

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