U.S. Trade Pressure on China is Further Escalating

The Trump administration is planning to increase trade pressure on China by threatening to block Chinese technology investment in the United States, The Wall Street Journal said in a report, citing officials familiar with the topic.

The Journal also said the U.S. may release details as early as next week on which Chinese products could be targeted in the administration’s preliminary call for 25 percent tariffs on $100 billion worth of imports. The report said the ban on Chinese investment in U.S. technology could be permanent.

Trump said last week he has asked the United States Trade Representative to consider $100 billion in additional tariffs against China. Last month, the U.S. slapped tariffs on up to $60 billion in annual Chinese imports.

Trade tensions between the U.S. and China have increased recently, as the Trump administration takes a more protectionist stance toward trade matters. These tensions have weighed on financial markets recently as investors fear a trade war between the two largest world economies may be around the corner.

Business groups in Washington have been lobbying hard, telling the White House that tariffs are counterproductive. But administration officials have come to the opposite conclusion: They believe the threats are working. “China basically surrendered [with the Xi speech] and he [Trump] is probably going to put even more pressure on them before he accepts whatever their bottom line becomes,” said a person familiar with White House views.

According to the WSJ, Chinese officials publicly deny they are bending to Washington’s pressure, but behind closed doors, they acknowledge that the trade threats are leading them to accelerate their plans to liberalize.

Beijing currently levies a 25% import tariff on vehicles, compared with the U.S. 2.5% tariff—an imbalance President Trump has repeatedly attacked, even though the U.S. has its own 25% tariffs on pickup trucks.

Beijing also requires foreign car makers to enter into a 50%-50% partnership with Chinese companies to set up plants. Chinese officials said the auto tariff would be reduced and the ownership cap would be lifted gradually, adding they might lift the cap within three to five years.

“Pressure from the U.S. is providing an impetus to the need for change,” said a Chinese official.

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