A Trump administration review found that the country’s government is forcing unfair technology and intellectual property transfers from U.S. companies, which allows the White House to impose trade remedies pursuant to a 1974 statute.
The U.S. is teeing up tariffs covering approximately $50 billion worth of products from China across 1,300 tariff lines, pursuant to a seven-month Trump administration investigation that found Beijing is unfairly forcing U.S. companies to transfer technologies and intellectual property (IP) to China, a senior White House official said during a call with reporters on Thursday.
The Office of the U.S. Trade Representative (USTR) will release a list in a Federal Register notice detailing the specific products that will be subject to the measure, the official said.
The administration in August started an investigation of Chinese IP and technology transfer practices for foreign investors under Section 301 of the Trade Act of 1974, which allows the executive branch broadly to take action to bring about the elimination of any harmful conduct found through such reviews.
President Donald Trump was expected to formally announce trade action Thursday afternoon.
National Economic Council Deputy Director Everett Eissenstat said trade officials are further recommending that Trump direct USTR to pursue World Trade Organization (WTO) dispute settlement targeting China’s discriminatory licensing policies.
Advisers are also recommending that Trump direct Treasury within 60 days to propose executive branch action complementary to activity by the Committee on Foreign Investment in the U.S. (CFIUS) to address concerns “about unfair acquisition of investment in the United States either directed or facilitated by China in industries or technologies which are deemed important” to the U.S., Eissenstat said.
“This has gone through a very, very extensive interagency deliberative process,” he said. “The remedies were carefully weighed. The end objective of this is to get China to modify its unfair trading practices, and it has been something that has been ongoing for quite some time.”
U.S. actions up to this point have not been effective in persuading China to change its unfair commercial practices, which the country employs to gain a competitive advantage over other economies, Eissenstat said.
The process of regular U.S. bilateral economic dialogues with China has failed in producing tangible results over the last 15 years, including Trump’s meeting with Chinese President Xi Jinping at his Mar-a-Lago, Fla. estate in April 2017, said White House Director of Trade and Industrial Policy Peter Navarro.
“This is a case where literally hundreds of people throughout the interagency worked for many, many months on this project, and there is not an inch of daylight between anybody, either within the White House or within the Cabinet agencies on this action,” Navarro said.
A USTR official during a Wednesday call with reporters also said the “Section 301” investigation found that continued diplomatic engagement with China didn’t change China’s unfair trade practices, and noted that the previous presidential administrations of George H.W. Bush and Bill Clinton also undertook such reviews, with the latter using it in 1995 in an attempt to secure greater U.S. automobile market access in Japan.
U.S. Trade Representative Robert Lighthizer during a Wednesday hearing before the House Ways and Means Committee repeatedly emphasized that the administration is employing an algorithm in its forthcoming tariff action to minimize pressure on U.S. industry and maximize pressure on China.
The interagency investigation originally incorporated 2014 and 2015 data, but was then expanded to include data from 2016 and 2017 as it progressed beyond its August commencement, a second administration official said on the Thursday call.
U.S. to impose tariffs on $50b in Chinese imports
