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President Trump repeatedly talked about China's unfair trade practices. What were those?

Do other countries like China install unfair trade guidelines? Or, is China being targeted "unfairly"?

the gods from engineering
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  • Related: https://politics.stackexchange.com/questions/18508/why-dont-western-countries-penalize-chinese-companies-in-the-same-way-that-chin – JonathanReez Jul 30 '18 at 20:11

2 Answers2

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Peter Navarro, the White House National Trade Council and Office of Trade and Manufacturing Policy Director, put out a report called "How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World". In it there are many specific accusations against Chinese "economic aggression", with evidence cited for each. There's also a video of Navarro doing a press conference about the report. Here are the accusations:

  1. Physical theft and cyber-enabled theft of technologies and IP
    • Physical theft of technologies and IP through economic espionage
    • Cyber-enabled espionage and theft
    • Evasion of U.S. export control laws
    • Counterfeiting and piracy
    • Reverse engineering
  2. Coercive and intrusive regulatory gambits
    • Foreign ownership restrictions
    • Adverse administrative approvals and licensing requirements
    • Discriminatory patent and other IP rights restrictions
    • Security reviews force technology and IP transfers
    • Secure and controllable technology standards
    • Data localization mandates
    • Burdensome and intrusive testing
    • Discriminatory catalogues and lists
    • Government procurement restrictions
    • Indigenous technology standards that deviate from international norms
    • Forced research and development
    • Antimonopoly law extortion
    • Expert review panels force disclosure of PI
    • Chinese communist party co-opts corporate governance
    • Placement of Chinese employees with foreign joint ventures
  3. Economic coercion
    • Export restraints restrict access to raw materials
    • Monopsony purchasing power
  4. Information harvesting
    • Open source collection of science and technology information
    • Chinese nationals in U.S. as non-traditional information collectors
    • Recruitment of science, technology, business, and finance talent
  5. State-sponsored, technology-seeking investment
    • Chinese state actors involved in technology-seeking FDI
    • Chinese investment vehicles used to acquire and transfer U.S. technologies and IP (mergers and acquisitions, greenfield investments, seed and venture funding)

The report makes the case that they are all done in bad faith as part of a deliberate concerted effort to:

  • Protect China’s home market from imports and competition
  • Expand China’s share of global markets
  • Secure and control core natural resources globally
  • Dominate traditional manufacturing industries
  • Acquire key technologies and intellectual property from other countries, including the United States
  • Capture the emerging high-technology industries that will drive future economic Growth and many advancements in the defense industry

The tariffs are therefore partly retaliations in response to what the Trump administration views as aggressive actions by the Chinese state.

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dain
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  • regarding Navarro's summation of the China's concerted efforts that you cite: Shouldn't the US have those same efforts? It's the manner used to achieve those goals that the US objects to. – BobE Jul 30 '18 at 15:28
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    Of course; but the methods are sufficiently malicious that they should invite retaliation regardless of the deficit. – dain Jul 30 '18 at 15:30
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    agree with your point about retaliation - what I think is being questioned is if tariffs is the most effective method. For Example: I'm not clear on what the US grievance is with Canada, but bumping up FE and AL tariffs seem to be having a negative impact on AL (according to Alcoa's CEO) [ https://www.marketwatch.com/story/why-trump-administrations-aluminum-tariffs-are-hurting-alcoa-more-than-helping-2018-07-19 ] – BobE Jul 30 '18 at 15:54
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    It may help to see the tariffs being used as a geopolitical as well as economic weapon. Even if they hurt the USA (debatable), they can hurt the target even more. This gives leverage in negotiations (for Canada, NAFTA renegotiations; for China, the North Korea question). – dain Jul 30 '18 at 15:57
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    So, would you agree that this trade war is just a game of chicken? – BobE Jul 30 '18 at 16:21
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    By that standard, all human conflict is a game of chicken because both sides always get hurt. Your metaphor proves too much. – dain Jul 30 '18 at 16:23
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    It's alright to just say you don't like protectionism and leave it at that; we clearly disagree here and I don't care to keep sniping about it. – dain Jul 30 '18 at 16:24
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    Playing devil's advocate here. By no means siding with China in this one. But basically the list also applies to US policies. The USA does half of the things on this list on a regular basis. Tariffs and regulations against specific states are on first page of US Foreign Policy play book. The US has no "trade barriers" but hell of a lot of "regulatory barriers" that shift everything into their play field. That's why most of Latin America refuses to sign free trade agreements with the USA. Because it means your products not being able to enter the US after they flooded your market with theirs. – hjf Jul 30 '18 at 20:15
  • @hjf-Specifically what "half of the list" of activities does the USA do on a regular basis? Not the list of goals (at the bottom of the post) but the list of actual activities? I wonder if you are even remotely involved in any form of international trade at all because USA regulations on businesses doing international business are quite onerous, very specific and quite strict. No legitimate USA business would dare get caught doing pretty much everything on that list of 'activities' from above. The government would crucify the company and the people involved. – Dunk Jul 30 '18 at 21:39
  • Should never have been given MFN status –  Jul 31 '18 at 12:42
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    @Dunk 1. Physical theft, espionage, etc. The US has the CIA doing that for them. Let's not pretend they don't do that (TBF all countries do). Reverse engineering (since when is that bad?). 2. Coercive and intrusive regulatory blah: ever try setting up a company in the USA as a foreigner? 3. Economic coercion: The USA does not sell to anybody in a large scale. That goes along with point 1 (export controls. For example: non NATO countries cannot buy 10 NVIDIA Teslas). 4. Information harvesting... NSA dragnet. Remember it's fully legal to spy on non americans!. 5 that one is typical USA. – hjf Jul 31 '18 at 12:48
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    @Dunk also keep in mind US embassies around the world aren't only "consulate services". They serve many purposes such as "strong statements" (Jerusalem, Havana), intelligence gathering, and also as platforms for US businesses. BIG US companies winning contracts with foreign governments usually go through US embassies to "introduce themselves". This is true for most "superpower" embassies, but no other country gives such "statements" as the USA does with their embassies. – hjf Jul 31 '18 at 13:11
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    Some of these are quite hokey. The whole "information harvesting" is particularly contrived. This doesn't even approach NSA level stuff. It's gathering open source data: pulling in news articles, academic papers, googling stuff...not exactly what I'd call an aggressive act. And earning a STEM degree in the US is an aggressive act? Many US states incentivize out-of-state students to return after they earn a degree. If anything, the US is aggressively recruiting Chinese students. – Underminer Jul 31 '18 at 13:12
  • @Underminer an individual who excels at sports, arts, or sciences can get the US citizenship basically immediately. Regarding NSA-level gathering, that one is doubtful. Just as the USA has backdoors in every Cisco device, China has backdoors in every Huawei device. Let's not even mention the ultra secretive Intel Management Engine (there's a reason Intel is called INTEL, amirite? jk). – hjf Jul 31 '18 at 14:34
  • @BobE In game theory, this is called "Tit for Tat". "Chicken" is a different game. – JimmyJames Jul 31 '18 at 15:17
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Before we discuss qualitative "fairness", there's a practical reason to single China out even if it's not qualitatively different: scale.

US trade deficit is $795B total. Of that, $375B or 47%, is with China (source: Wikipedia) - dwarfing deficit with any other country (more than twice the size of next biggest entity, EU, and more than 5 times the deficit with biggest single country, Mexico). And the trade deficit in goods with china is 65% of total (source).

As such, reducing China deficit is the most effective way to reduce overall deficit, on per-country basis.

Additionally, that deficit is the result of the greatest import/export imbalance among major trading partners. If you ignore countries with less than $20B exports from USA, China exports 3.9 times more of what it imports from USA - with the next largest ratio being 2.1 for germany and 2.0 for Japan (source: same Wiki table, but exported to Excel and imports divided by exports and filtering out smaller importers of US goods).

As such, reducing China deficit via a trade war is the least negatively-impactful way to reduce overall deficit, as there are less exports to China to negatively affect.

The official reason for the first round of tariffs was theft of intellectual property (source):

The investigation concluded that China has stolen or coerced US companies into turning over their intellectual property through a series of state-run structural maneuvers, including its requirement that foreign companies partner with Chinese companies to access the Chinese market, said Everett Eissenstat, the deputy director of the National Economic Council for international economic affairs.

The investigation also assessed that China has stolen US intellectual property by hacking US computer networks, though senior administration officials said Thursday's tariffs would not account for the value of that intellectual property theft, which they estimated to be in the hundreds of billions of dollars.

I'm omitting other accusations as they were NOT actually leveled as part of the first round of tariffs (e.g. currency manipulation, pricing etc...)

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user4012
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    This is assuming that trade imbalance is always bad, which doesn't seem an universal view on the matter: https://money.cnn.com/2018/03/14/news/economy/what-is-a-trade-deficit/index.html or https://www.nytimes.com/2018/03/05/us/politics/trade-deficit-tariffs-economists-trump.html – the gods from engineering Jul 30 '18 at 15:06
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    You spotlight the trade deficit and China indeed is where trade is most out of balance. So, if the US is willing to go to "war" over trade deficit, there should be some consensus that a trade deficit is intrinsically bad for the US. Is there such a consensus? – BobE Jul 30 '18 at 15:10
  • Surely the fact there's a deficit implies it's bad by default, especially on the assumption that there's no trade surpluses elsewhere (and there hasn't been any trade surplus shown or evidenced to offset a deficit). – SE Does Not Like Dissent Jul 30 '18 at 15:22
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    @SSight3 "I’m way down on trade with restaurants, grocery stores, malls, and movie theaters. I keep buying from them, but they never buy from me. I must be getting ripped off, right?" - Rep. Justin Amash (R-MI) – C. Helling Jul 30 '18 at 15:24
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    That analogy is not applicable to the USA because it has a net trade deficit -- the deficit with China is not balanced out by surpluses from other countries. In the restaurants-and-groceries analogy, you have a "surplus" with your employer in the form of wages. If that "surplus" doesn't match the "deficits" with the restaurants etc, then you do have a problem. – dain Jul 30 '18 at 15:27
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    In fact I would say the analogy obscures more than it illuminates. In international trade, the "goal" is to have imports balanced by exports. However in personal finance you generally don't want income to match expenditure, at least during your working life. You want to spend less than your earn, so you can save the remainder. – dain Jul 30 '18 at 15:32
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    @SSight3 - regarding your statement about trade surplus: " US is a powerhouse in services, as well. Think media, finance and technology. In services, the United States ran a $244 billion trade surplus last year." So yes, US has become a major exporter of "soft goods" and has, for many decades now, less focused on manufacture of "hard goods". – BobE Jul 30 '18 at 15:39
  • The net trade deficit includes services as well as goods so I don't know what kind of point you think you're making. – dain Jul 30 '18 at 15:48
  • @dain Challenge your assertion that 'and there hasn't been any trade surplus shown or evidenced to offset a deficit' . So there does appear to be a significant sector that is offsetting the manufactured goods sector. Beyond that, for (perhaps the last half century) the US has become a global consumer nation as opposed to a global provider nation. I contend that much of this is fueled by the US imbalance (globally) in per capital discretionary spending. All I'm saying is that a trade deficit is the natural consequence of buying more foreign goods than self-producing those goods. – BobE Jul 30 '18 at 16:09
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    @ dain - continued - that reliance on buying more foreign goods is fueled by the US consumer. In effect - the population has been voting to produce the bulk of (say shirts and socks) overseas by their buying choices. – BobE Jul 30 '18 at 16:16
  • Well this time they voted for tariffs, with their actual votes. – dain Jul 30 '18 at 16:21
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    @Fizz - whether or not it is bad is irrelevant to the question. It's the stated policy goal of the administration. The question was "why is China was being singled out". – user4012 Jul 30 '18 at 16:25
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    @dain - then it will be a surprise when his tariff supporters learn that the end-game is Zero Tariffs, Zero Subsidies. (BTW, the "actual" voters did not vote for Trump) – BobE Jul 30 '18 at 16:38
  • @fizz - I agree , the tariff "good or bad" is not the original question. It only comes up when questioning if it was the most useful retaliatory tool. – BobE Jul 30 '18 at 16:42
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    Yes, but the way you wrote your answer gives the impression you think it's always bad, not just that the Trump administration believes that. Before you get to "the official reason" there's not a single sentence that is referencing Trump or his administration. – the gods from engineering Jul 30 '18 at 17:50
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    @Fizz - can you please clarify where in my answer I have a value judgement on tariffs? – user4012 Jul 30 '18 at 20:01
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    By your [own] quantitative analysis you're trying to prove that Trump is correct in targeting China. If you simply wanted to say that that's one of Trump's goals it would have taken you much less space to do that, as in a quote from him, which I'm sure is easy to find, because he complained about China dozens if not hundreds of times in his speeches. – the gods from engineering Jul 30 '18 at 20:06
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    @Fizz - No, I am trying to prove that if you want to cut deficit, targeting China is a correct thing to do. There's a difference. – user4012 Jul 30 '18 at 23:31
  • @user4012 but is that really the case? Look at it from China's point of view, why don't they import as much goods from the USA? It's because they can make the stuff cheaper. What do the tariffs do? Make it harder for US companies to cheaply produce stuff (because they have to buy more expensive resources). So either companies fail, they move abroad or become less competitive. Either way, US companies will be at an even greater disadvantage when selling to other countries or domestically, thus 'negatively' impacting the goal of lowering the overall deficit. – JJJ Jul 31 '18 at 08:51
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    The trade deficit is created by the forces of the free market. China offers most products much cheaper than the US equivalent. I thought the US loves the free market (e.g. 2000% price hikes on essential medication are OK because "free market!")? But now that they are on the loosing side of globalization, the US elites suddenly changed their minds... – Georg Patscheider Jul 31 '18 at 10:27