Tariff Chess Match Escalates Between China and the United States

2 minute read | May.20.2019

Trade Secrets Watch has been covering the escalating economic tension between China and the U.S., including the U.S. Trade Representative’s investigation on China’s alleged IP theft under Section 301 of the Trade Act of 1974, dueling imposition of tariffs in March 2018, and the USTR announcement of products against which it proposed to impose 25 percent import duties.

The conflict appears to have materially escalated over the past two weeks. The U.S. raised existing tariffs on $200 billion worth of Chinese-made goods from 10 percent to 25 percent and is threatening tariffs on another $300 billion. China responded with an increase of tariffs on $60 billion of American products.

Beyond tariffs, President Trump issued an executive order that declared a national emergency with respect to foreign adversaries who are “increasingly creating and exploiting vulnerabilities in information and communications technologies and services . . .to commit malicious cyber-enabled actions, including economic and industrial espionage against the United States and its people.” The order authorizes the Commerce Secretary, with input from other top officials, to block transactions that involve information or communications technology that “poses an unacceptable risk to the national security of the United States.” While the executive order is country and company agnostic, it is widely believed to be motivated, at least in part, by the perceived threat from Chinese companies with ties to the Chinese government. The day after the executive order, the U.S. Commerce Department added Huawei and 70 of its affiliates on a trade blacklist. As a result, Huawei will have to seek approval from the U.S. government before American companies can provide it with parts.

These may not be the end of the executive actions putting the pressure on China. Six weeks remain before President Trump is scheduled to meet with Chinese President Xi Jinping at the Group of 20 summit in Osaka, Japan. Trade Secrets Watch will continue to provide updates on the situation.