President Trump has enacted or threatened levies on almost everything coming into the U.S. from China.
In other words, Trump is reaching the limits of what he can possibly do to put pressure on China through new tariffs.
But that doesn’t mean that the administration is going to stop there. Economists note that there are still other economic tools the president could use to try to bludgeon Beijing into submission.
And now that the U.S. is hitting those limits on tariffs, such efforts are getting more likely. Goods imported from China totaled $505 billion last year. Trump has already enacted tariffs on $250 billion of them. Should he follow through with the threat of tariffs on $267 billion more that he made last week, they’ll cover every product coming in, with room to spare.
It seems pretty clear that the $267 billion more in tariffs are definitely coming, says Jeff Weiss, former deputy director for policy and strategic planning at the Commerce Department.
“He gave himself no wiggle room … He said if China retaliates we’ll ‘immediately’ go to the next round of tariffs,” Weiss said, noting that China responded to Trump’s latest round of tariffs the same day with $60 billion in new tariffs against the U.S. “So they’re going to do it and probably pretty soon.”
Even without the additional $267 billion, the Trump administration was already set to raise the pressure on China again next year. Tariffs on $200 billion worth of Chinese goods that the administration enacted in mid-September start at 10 percent, but will rise to 25 percent next year.
They could easily rise some more, notes Gary Hufbauer, nonresident senior fellow at the Peterson Institute for International Economics. “What more they could do is to push the tariffs even higher. Twenty-five percent is pretty high, but they could go high enough to genuinely deflect all trade,” he said. “What Trump has done is weaponize tariffs in a way we haven’t seen before.”
The president could also ratchet up the economic pressure through such things as tightened safety regulations or limitations on foreign investment, trade policy experts note.
“There are a lot of non-tariff barriers that can be on the table,” said Brandon Arnold, trade policy expert with the National Taxpayers Union. “Less transparent tactics, like customs issues.”
For example, the White House banned Chinese Telecom giant ZTE in April from operating in the U.S. for seven years. The ban was lifted in July after the company made a deal with the Commerce Department and put $400 million into an escrow account that the U.S. could draw from if the deal is violated. The administration regulated ZTE for genuine national security reasons, but the mechanics would be the same for trade purposes.
If it wanted to go the route of an “economic cold war,” Hufbauer says, the administration could cut off Chinese access to U.S. finance. It could tighten China’s access to U.S. visas as well.
The administration’s 25 percent tariffs on all steel imports and 10 percent on aluminum tariffs are policies largely directed at China. The blanket nature is meant to prevent third-party countries from being used to circumvent the tariffs.
With neither side apparently budging in the fight so far, these alternative methods may soon become the new weapons in the fight. Business leaders are wondering what is next.
Tom Donohue, president of the Chamber of Commerce and a critic of tariffs, told reporters at a Sept. 19 event that even flat prohibitions on certain imports were possible.
“There are a lot of things [China] makes that they want to send here. You could just as easily say, ‘You can’t import that into the U.S. right now.’ And that gets people’s attention,” said Donohue.
Trump and other officials have said they expect their tariffs to remain in place for years, potentially — as will Beijing’s. “I’m like them; I have a long horizon,” Trump said in August.
“They want to let the tariffs go into force and then basically cook,” said Weiss, the former Commerce official. “Let [China] feel the pain over a long period of time.”
Beijing may have also hit a wall in terms of what it can do in terms of tariffs. Imports to the nation from the U.S. totaled $130 billion last year. Its latest announced round of tariffs means that $120 billion of them will now face levies.
It has other ways to try to pressure the U.S., too. Over the summer, its antitrust regulator blocked San Diego-based company Qualcomm, which sells most of its products in China, from acquiring a Dutch company NXP Semiconductors. The move was widely seen as retaliation for Trump administration policies.
Then again, notes Weiss, its was China’s non-tariff trade policies that sparked the fight. “There’s a lot of things China could do off the books to make it more difficult for U.S. companies to operate there,” he said. “The administration’s argument would be: ‘They’ve been doing that for a long time and that’s why we’re in this situation.’ ”
