Manufacture This

The blog of the Alliance for American Manufacturing

China's unfair trade practices have long gone unchecked.

Big trade news. Yuge, in fact.

President Trump on Monday announced in a statement that he will impose a 10 percent tariff on an additional $200 billion worth of Chinese imports, effective Sept. 24. That figure will rise to 25 percent come Jan. 1, 2019.

That's not all: Trump threatened additional tariffs on $267 billion worth of even more imports from China, which he described as "phase three," if China decides to retaliate with tariffs of its own. As the Wall Street Journal pointed out, that amount isn't by accident -- the current round of tariffs cover about half of Chinese imports (Trump previously announced tariffs on about $50 billion worth of imports).

If the president does end up imposing the additional $267 billion, just about all imports from China will be covered.

O.K., all joking aside, there's little doubt that the one-time steak and board game salesman is a big proponent of tariffs. While The Donald has done quite a few things since taking office that have taken folks by surprise, he's been remarkably consistent when it comes to trade.

Trump isn't afraid to issue tariffs; in fact, he seems to relish in it. That, of course, turns a lot of people off.

But what's important to keep in mind here is that despite Trump's unpredictability on so many things, there's sound reasoning behind why his administration is going after China. As Trump explained in his official statement: 

"We are taking this action today as a result of the Section 301 process that the [U.S. Trade Representative] has been leading for more than 12 months.  After a thorough study, the USTR concluded that China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property – such as forcing United States companies to transfer technology to Chinese counterparts.  These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy."

Here's the deal: China has consistently engaged in unfair trade practices and broken trade laws. Years of talks with Chinese officials have done little to stop this. 

Intellectual property theft is one major concern. In order to gain access to the Chinese market, U.S. companies must enter into a "joint venture agreement" and hand over their intellectual property (IP) to China. As a result, these companies quickly find themselves competing against the very products they spent years to create. 

Other American companies have seen their trade secrets stolen after being hacked by the Chinese government. A recent report by the Foundation for Defense of Democracies found that Chinese cyber espionage costs the U.S. economy up to $300 billion annually

Even folks who disagree with some of Trump's trade moves agree that China is a big problem. Trump's former economic adviser Gary Cohn -- a free trader who quit the administration over his trade differences with Trump --- said at an event on Monday that "the president has some fundamentally correct issues on tariffs. What the Chinese have done to us for the last two decades is just wrong."

Michael Froman, who served as U.S. Trade Representative under former President Barack Obama, said in a recent interview that while "different administrations have had different approaches... certainly some of the underlying concerns about subsidies, about [intellectual property] theft, about forced technology transfer, those are longstanding issues that a number of administrations have been concerned about." 

While Trump is pursuing a different path than his presidential predecessors, the issues that he is trying to address aren't new. American companies and workers have been fighting a trade war for years against China. They've been losing.

Only time will tell if Trump's plan will work. But one thing is clear: It's time to get tougher on China.

As AAM President Scott Paul put it: "Strong trade enforcement against China’s persistent violations of trade laws, including the theft of American trade secrets, is long overdue... America has the leverage in this economic relationship, and it's about time we use it to defend our workers and businesses."