Trump's tough trade measures would jeopardize US-China trade relations, says expert

Trump's tough trade actions against China's "unfair" trade practices would heighten the risk of a destructive trade war between the world's two largest economies and might set a new direction for America's trade policy, a US trade expert told recently.

Last week, Trump signed a memorandum to impose retaliatory tariffs on up to $60 billion of Chinese imports and restrictions on Chinese investment in the United States, following the release of a Section 301 report on China's acts, policies and practices related to technology transfer, intellectual property and innovation by the Office of the US Trade Representative.

Slapping tariffs on Chinese products could be considered as a legitimate action under the US trade law, but it goes against the rules set by the World Trade Organization, which clearly stipulate when and on what conditions import taxes can be levied, said Claire Reade, who served as Assistant US Trade Representative for China Affairs in the Office of the US Trade Representative.

Real trade conflicts between the United States and China would break out if the United States acts on what the memorandum says unless the two countries reach a compromise within 60 days, the time Trump gave to China before the retaliatory tariffs take effect, said Reade, who is a senior associate with the Freeman Chair in China Studies at the Center for Strategic and International Studies.

Reade believes that China would respond with an immediate action once the United States begins imposing retaliatory tariffs on Chinese goods as the US move is identified as "illegal" under the framework of WTO rules.

In order to claim the moral high ground in its trade battle with the United States, China might respond by asking state-owned enterprises to stop importing US-made soybean and aircraft, finding fault with American agricultural products on the excuse of health concerns, or questioning the legality of Section 301 under the WTO framework, predicted Reade.

China's Ministry of Commerce has announced to react with retaliatory measures against 128 categories of American goods worth up to $3 billion in imports from the United States. The ministry has also announced to take measures against the 128 US goods in two stages if it could not reach an agreement with the United States, warning that a legal action would be initiated at the WTO.

Reade also analyzed the trade policy inclination of the Trump administration. Trump thinks that he will win the trade war, and his belief would be strengthened by some of his cabinet members holding tough stance on Beijing, said Reade, adding that this situation would lead to a possibility that the calls of American businesses worrying about the rise of trade protectionism would fall on deaf ears.

In Reade's opinion, the trade war between the United States and China would only result in commutative trade sanctions as Chinese President Xi Jinping has said that China's economy would continue to grow even if the US suspends imports of Chinese goods and commutative retaliation would bring unimaginable consequences to the global economy.

Reade thinks that Xi would finally reach an agreement with Trump by conditionally opening China's non-technological sectors to American investors in exchange for Trump's withdrawal of the tariff decree.

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