Bloomberg’s Malcolm Scott is wrong. Last week’s Supreme Court decision to suspend President Donald Trump’s tariffs on nations including China did not give Beijing new leverage against the United States, nor did it undermine Trump’s efforts to uncouple the U.S. economy from the Chinese economy. Trump continues to possess several powerful tariff levers that he can use against China.
Trump is justified in employing these levers against China.
After all, China engages in extensive economic espionage against the U.S. Through espionage, China is attempting to obtain access to Nvidia’s most advanced accelerated computing platforms. That is a clear violation of U.S. export controls. China is also trying to undermine the manufacturing base of the U.S. and its allies. Beijing resorts to massive state subsidies for its manufacturing exports. Regardless of economic losses, China ensures that its manufacturing exports remain low-cost and take market share from U.S. domestic producers. When U.S. producers are forced out of a market, China uses its manufacturing dominance to extract concessions from the U.S. and other countries. Witness China’s policies regarding rare earth minerals.
Trump plans to visit Beijing at the end of March. During that trip, Trump will have a full deck of tariffs available to impose should he so desire. Moreover, the tariff statutes at Trump’s disposal are not subject to the recent Supreme Court ruling on tariffs. Under Section 301 of the Trade Act of 1974, the U.S. can use tariffs to combat “unreasonable and discriminatory” foreign trade practices, such as intellectual property theft or forced technology transfers. China routinely steals U.S. technology and forces American companies operating in China to transfer sensitive technology and information. Trump can legally use Section 301 to protect the semiconductor industry and other critical U.S. markets.
Trump’s other ace card in the upcoming negotiations is Section 232 of the Trade Expansion Act of 1962. Under this broad authority, the president can restrict imports that threaten national security. Section 232 is currently being used to protect nationally important U.S. industries such as steel and aluminum, as well as advanced technology sectors such as semiconductors and certain minerals. Moreover, because of China’s overt attempt to dominate global manufacturing, the president could use the authority of Section 232 to protect additional segments of U.S. manufacturing. Manufacturing is critical to the future of the U.S. economy. Importantly, when the president uses statutory powers to protect national security, federal courts, including the Supreme Court, traditionally demonstrate deference.
READ IN FULL: PRESIDENT DONALD TRUMP’S STATE OF THE UNION SPEECH
Top line: China did not gain an advantage from last week’s Supreme Court decision.
Trump will be able to sit down with Xi and negotiate from a position of strength.
James Rogan is a former U.S. foreign service officer who later worked in law and finance for 30 years. Today, he writes a daily note on markets, economics, politics, and social issues.
