Washington
The moves, less than 10 days after Treasury Secretary Steven Mnuchin said that the trade war with China was “on hold,” appear designed to create bargaining leverage for Commerce Secretary Wilbur Ross, who is due to arrive in Beijing on Saturday for talks aimed at cooling trade tensions between the two countries.
The sudden policy shifts are amplifying an impression of unpredictability that the president believes gives him an edge at the bargaining table even as U.S. trading partners complain that it erodes American credibility. Adding to the confusion are divisions between Trump’s trade advisors and complaints from members of Congress, who fear that the president may be stumbling into a multi-front trade war he can’t win.
Along with confronting China, the Trump administration is embroiled in talks over a new North American trade deal and is threatening to impose new global tariffs on imported automobiles.
Initial Chinese reaction to the surprise White House statement was restrained.
“We are very surprised by the White House statement. No matter what measures the U.S. will take, China is confident and capable of defending our national interests,” the Chinese Ministry of Commerce said on Tuesday.
The president has been seeking Chinese agreement to reduce the $375 billion U.S. goods trade deficit and to drop trade practices that he said hurt American companies. But two days of talks in Washington ended earlier this month with only vague Chinese promises to buy more U.S. agriculture and energy products.
“The Trump administration is back in attack mode against China after what had appeared to be a temporary truce in the trade tensions,” said Eswar Prasad, former head of the International Monetary Fund’s China division. “China’s unwillingness to agree to a trade deficit reduction target or make other major concessions has probably emboldened those in the administration who have argued for a hard line stance against China on trade issues.”
The White House statement said the president had been “updated” on several steps following the March release by U.S. Trade Representative Robert Lighthizer of a study detailing a sweeping Chinese effort to vacuum up American technology through legal and illegal means. But none of the actions described in the one-page statement are yet certain to take effect.
“The United States will implement specific investment restrictions and enhanced export controls for Chinese people and entities related to the acquisition of industrially significant technology,” the White House said in a brief statement.
Specifics of the new investment limits will be announced by June 30 and will take effect “shortly thereafter,” the White House said. In midday trading, the Dow Jones industrial average was down more than 400 points, or 1.7 percent, on renewed concerns over the unsettled Italian political situation and U.S.-China tensions.
The White House announcement may be only the latest dizzying turn in Trump’s carrot-and-stick approach to trade negotiations. After threatening tariffs on up to $150 billion in Chinese products in April, the president settled earlier this month for what Mnuchin described as a “framework” for progress, following two days of bargaining with Chinese officials in Washington.
Now, tariffs on the first $50 billion are back on track — though the president could change course again.
“The tariffs and the other stuff are totally discretionary and can be waived,” said Jeff Moon, a former U.S. trade negotiator.