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US Trade Tariffs against China

Written By: - Date published: 2:14 pm, March 23rd, 2018 - 66 comments
Categories: capitalism, China, Donald Trump, trade, us politics - Tags:

Make no mistake: this is the single biggest anti-trade act the world has seen since the Iranian revolution’s nationalisation program from 1979. President Trump’s announcement of wide-ranging trade tariffs against China, on top of the steel and aluminium tariffs, were announced like this: “We have a tremendous intellectual property theft situation going on.”

Anyone can go down to their local Ssanyong dealer, Event Cinema, phone shop, or itinerant Louis Vuitton bag market-seller to see how China treats I.P. property, all the way to the bank. Xiaomi, Weibo, and Youku are viewed by many as total imitators of Apple, Twitter, and YouTube.

The World Intellectual Property Organisation defines intellectual property as “creations of the mind: inventions; literary and artistic works; and symbols, names and images used in commerce.”

You kind of expect an economy to get more sophisticated over time with its own inventions and creative capital, commercialise up into the value chains, away from bulk and cheap goods. But as the development of the New Zealand economy itself shows, there’s no inevitability to that. The U.S. suspicion is that China remains a copycat economy, coasting on U.S. intellectual drive.

The Chinese government in many areas remains explicit about strong-arming tech transfer as a condition of direct access to their economy. Collaboration – as we’ve seen with Facebook trying to get into China – is the price of commercial peace. China wants source code. Individual companies make their own decision on that explicit price of the deal.

China has the largest e-commerce market in the world, with over 550 million buyers and 700 million internet users. The price of entry to that is code access, and database access. Go to China and you can’t get Facebook, Google, Snapchat, Pinterest, many foreign films, Apple Ibooks and Itunes, and any network you access has full government access. They are still trying for access.

Investigations by U.S. trade specialists last year probed Chinese violations of U.S. intellectual property under Section 301 of the 1974 Trade Act. Conclusion: China used foreign-ownership restrictions to compel American companies to transfer technology to Chinese firms. Plus, directing firms to buy U.S. ones to get secrets. Plus, cyberattacks to access trade secrets.

What is at stake – apart from the stability of the entire world economy – is policies by the Chinese government that require foreign companies in China to share their technologies either with the state and its regulators (for national security concerns), or to engage in partnerships with local companies in specific sectors with the requirement of tech transfers. This isn’t I.P. theft per se. It’s commerce.

This can be seen as a highly developed economy attacking a less developed and much poorer economy. Strong I.P. rights favour the world’s rich, idea-exporting, patent-holding countries over poorer countries. But who will invest in the smart ideas we all need and demand if they’re just going to get ripped off?

The U.S. ain’t pure in this. Charles Dickens complained bitterly of “the exquisite justice of never deriving a sixpence from an enormous American sale of my books.” The U.S. got away with I.P. theft from the U.K. on a grand scale. Trade practices now prohibited, including high tariffs, dumping, I.P. theft, and other competitive measures, were key to growing the U.S. as the economic power it is today.

But the U.S. is signaling that it is high time that the world cooperated commercially to get more out of access with China: more I.P. investment protection, less theft, lower thresholds to market access.

In turn, China knows it has a stake in protecting its own growing intellectual property, and are a long way from having so a strong domestic economy that does not need international trade.

These countries need each other far too much to start trade wars as the U.S. has just done.

Also, China can and does change. In April 2017 they allowed foreign majority ownership of automotive joint-ventures by 2025.

That gives their industry time to mature. As the world’s biggest auto market, that’s big for managerial freedom, electric vehicle tech evolution, and of course investment certainty. This move came off the April 2017 meeting between Chinese President Xi Jinping and U.S. President Donald Trump, which produced a 100-day plan geared towards reducing trade imbalances. It’s been only a year, and now this.

Notably New Zealand is not among the tight friends that the U.S. awarded steel and aluminium exceptions to Canada, Australia and others. In current trade politics, that is a useful demonstration of our neutrality between the two.

But tethered to China through our Free Trade Agreement, to Australia by CER, and to a large newly-built CPTPP raft with untested binds on its floats, we face global economic waves that are getting very high very fast as the world’s trade Godzillas rise.

66 comments on “US Trade Tariffs against China ”

  1. ianmac 1

    After WWll Japan started industry based heavily copying Western manufacturing. (They created a town called Sheffield so they could label cheap stainless steel Made in Sheffield.)
    Over following years goods imported from Japan were cheap and nasty copies, but steadily the quality of goods improved to today’s high standard.
    I have no doubt that the same will happen to the quality of Chinese goods and maybe supersede the quality and innovation of USA and others.
    What if China developed credible artificial meat or milk or wine?

    • Keepcalmcarryon 1.1

      People have used that comparison (japan/China) for years but it’s a tad simplistic, there are large cultural differences between the two nations reflected in very different corporate and worker cultures.

    • Pat 1.2

      guess who the Americans copied and stole the intellectual property of?……nothing new under the sun….wont stop the war or the fallout however.

    • cleangreen 1.3

      Probably will ianmac.

  2. Sanctuary 2

    The amoral global corporates will hate this.

    The Wall Street parasites will hate this.

    The neoliberal professional middle class will hate this

    The very serious people of the elite media will hate this.

    Therefore, if Trump sticks to his guns and he will be re-elected in a landslide.

    • Brigid 2.1

      Trump will do what he’s told to do. Not because he’s a whimp but because he’s too thick to know when he’s being manipulated.

    • cleangreen 2.2

      Absolutely Sanctuary,

      I love Trump’s guts and wished we had a real leader here who would stick up for us!!

      But after the TPP!! train wreck, we saw such a sorry sight of those who just sold us down the river.

      • One Anonymous Bloke 2.2.1

        The USA faked the Moon landings. 9/11 was an inside job. Trump is sticking up for you. PT Barnum has your IP address.

        • cleangreen

          Hillary faked burning those thirty three thousand emails to eh?

          • red-blooded

            And I bet you think all the evidence of Trump & his team doing dirty deals with Russia to manipulate the elections has been faked as well, eh, cleangreen? And note that the only reason Trump didn’t sign the TPPA was that he thought it wasn’t protective enough of the US. He has no objection to things like ISDs – he thought the measures in the draft TPPA needed to be stronger in those areas.

          • One Anonymous Bloke

            As everyone knows, she says she deleted them so it can’t be true, because she said it.

  3. AsleepWhileWalking 3

    Simon Black says (actually its more epic rant) if China wants to send the US steel below cost, Trump should says thanks and stay out of it. Words to that effect.


  4. Exkiwiforces 4

    Do you know this makes sense when Tump has also dump his National Security Advisor H.R McMaster and replace him with with old mate JohnBolton and I’m not going to mention this muppets pass track record as it speaks for itself.

    • alwyn 4.1

      My God, I thought you were joking when I read your comment.
      You’re not!
      I always thought Trump was nuts but he is even worse than I thought possible.

      • Exkiwiforces 4.1.1

        Yes we are living in interesting times atm and it’s rather like eating a box of chocolates atm as you don’t know what you are going to get until you get the first bite.

  5. clare 5

    “The U.S. ain’t pure in this. ”

    “The U.S. got away with I.P. theft from the U.K. on a grand scale.”

    “Trade practices now prohibited, …. were key to growing the U.S. as the economic power it is today.”

    thanks for pointing this out. when i was a kid all the penguin books and most others published in the UK were labelled “Not for sale in the USA or Canada” for precisely that reason. it was totally common knowledge that the publishers in the states stole anything that came into the country.

    J R R Tolkien had to ask all his fans in the US not to buy the Doubleday edition of his work and i think he made quite an impact on the situtation.

    looks like a case of what’s yours is mine and what’s mine is mine as well.

    • dukeofurl 5.1

      penguin books not being available for sale in US is for different reasons than preventing ‘theft by US publishers’

      Sometimes its just different copyright regs

    • Daveosaurus 5.2

      It was Ace, not Doubleday, who were ripping off Tolkien – Ballantine was the legitimate US publisher. (I’m not sure where Doubleday come into this though?)

      But this whole situation could be seen as Russia and China in the form of vultures, fighting over the carcass of a dying empire. Putin is seeking control over the political sphere through its control of the Republicans, while the Chinese Communist Party is well on its way to ownership of the American economy. Hence the Trump administration is attacking China through economic means, and American manufacturers and workers will be the collateral damage. Not that I’d be completely heartbroken at the final collapse of American capitalism, but it would be sad to lose some of the better ideals – freedom of speech, separation of Church and State, etc. – that America used to have (even if they never paid much more than lip service to them).

  6. Draco T Bastard 6

    This can be seen as a highly developed economy attacking a less developed and much poorer economy.

    You do realise that you’re talking about an economy that’s almost as capable as the US economy as technological development goes right?

    In fact, I wouldn’t be surprised if the number of poor people in the US was, relatively speaking, similar to the number of poor people in China.

    Also, China can and does change. In April 2017 they allowed foreign majority ownership of automotive joint-ventures by 2025.

    That gives their industry time to mature.

    Gives them time to change their mind as well. Just as they’ve been doing with their exchange rate:

    For more than a decade, China has been implementing reforms in its currency, with the ultimate goal of achieving a floating exchange rate regime and convertibility for renminbi – a movement widely described as renminbi internationalization. However, this report seeks to explain that the government has only been moving back and forth, without making significant progress in transforming renminbi into a market-oriented exchange rate.

    In other words a Yes, we will do what the rest of the world wants followed by reasons as to why it’s not happening. Reasons that look to go on forever.

    But tethered to China through our Free Trade Agreement, to Australia by CER…

    Both of which the other side doesn’t seem too keen to keep. Or, at least, just use the agreement as a smokescreen for ripping us off.

    Why are we maintaining this fiction that are these agreements again?

    we face global economic waves that are getting very high very fast as the world’s trade Godzillas rise.

    And the only defence we have against those waves it to build our own capabilities while eliminating foreign debt.

  7. joe90 7

    Far more people work in the industries China is lodging tariffs on than in the US steel industry.

    BEIJING (AP) — China announced a $3 billion list of U.S. goods including pork, apples and steel pipe on Friday that it said may be hit with higher tariffs in a spiraling trade dispute with President Donald Trump that companies and investors worry could depress global commerce.


    China’s proposed tariff hikes in response to the steel and aluminum duties appeared to be aimed at increasing domestic U.S. pressure on Trump by making clear which exporters, including farm areas that voted for the president in 2016, might be hurt.


  8. Matthew Whitehead 8

    The one upshot of this is that a lot of our exporters could do pretty well by pushing US competitors out of China due to these tariffs, but yeah, I doubt it’s worth the economic instability, especially with how we need China and the US to stay friends right now to deal productively with North Korea, etc…

  9. Paul Campbell 9

    I design electronics and manufacture in China, I ship stuff worldwide from China and the profits get returned to NZ (where I pay tax, including GST when appropriate).

    I’ve never been approached by the Chinese Govt, much less had them demand my source code (to be fair I design open source hardware and software so it’s not really an issue).

    For me at least doing business in China is all about people, not governments.

    Because I ship from China I’m likely to get screwed by Trump, I may have to move my fulfillment to Singapore or Vietnam. Sadly I can’t compete if I do it in NZ it’s $25 a package here vs. $1 in Asia, we’re very not well connected.

    I won’t deny that people in China are a bit more loose about IP stuff, the results are pretty amazing have a look at Bunnie Huang’s writing about “Gongkai”, it makes me realize how much our current IP regimes are a straitjacket to progress.

    The amount of stuff being designed in China at the moment is amazing remember not only does China have a quarter of the world’s people, it has a quarter of the world’s really smart people, more than the US does, now as they are joining the western world of course they are going to out compete everyone. When Trump decides the Chinese are somehow cheating when it simply more people working harder, well that’s just racism.

    • Paul Campbell 9.1

      By the way we’re in a better position than the Americans, unlike them we are a full member of APEC so we can get free business visas, we also have a free trade agreement with China, if China brings in punitive tariffs against the US we’ll have a trade advantage.

      My impression is that the Chinese are usually very fair, if visas to your country are cheap and easy to get, it will be the same when you are getting Chinese visas, make it expensive and China will do the same … I can easily imagine they won’t see doing the same with trade is a big deal

      • Ad 9.1.1

        Great comments from on the ground thank you Paul.

      • Lloyd 9.1.2

        NZ tourist visas to China are one entry and cost over $100NZ. Chinese tourists pay a lot less for a three month multiple entry visa. They are not equal.

    • Grafton Gully 9.2

      China’s tertiary education attainment was comparatively low in 2010, which should be taken into account. Also the creation of IP by “really smart people” in China is possibly blighted by a Confucian deference to authority.

    • Draco T Bastard 9.3

      Sadly I can’t compete if I do it in NZ it’s $25 a package here vs. $1 in Asia, we’re very not well connected.

      I suspect that it’s more complicated than that. There’s scale (something that’s slowly disappearing), transport, the manipulated exchange rate and workers protections that we have and China doesn’t.

      it makes me realize how much our current IP regimes are a straitjacket to progress.

      I realised that years ago when I came up with a design. Turned out it was already patented and so I couldn’t use my own work.

      The amount of stuff being designed in China at the moment is amazing remember not only does China have a quarter of the world’s people, it has a quarter of the world’s really smart people, more than the US does, now as they are joining the western world of course they are going to out compete everyone. When Trump decides the Chinese are somehow cheating when it simply more people working harder, well that’s just racism.


      • Paul Campbell 9.3.1

        As I understand it the service I use essentially purchases unused air-cargo space (the right to fill partially filled containers and the like) out of Asia (usually out of HKG, but sometimes out of Singapore), delivery times are variable – they quote 2-8 weeks to anywhere in the world, reality is usually 3-4 weeks with the occasional excursion.

        It’s a volume thing, move enough stuff then you can just sit in the airport and pour piles of packages into a container going to Munich, or Berlin from the “Germany” bin until it’s full, you can’t do that from here, NZPost just doesn’t have the volume – they probably send off a ‘Europe’ container every other day

        • cleangreen

          I Imported two 2KVA wind turbines from China, which the Chinese Government paid the freight free to the manufacturer.

          The manufacturer company told me this.

          I only had to pay for the port handling charge which was low at this end in Auckland of about $100 Dollars for one and a half tonnes of freight.

          NZ cannot compete with a country that gives free global freight to it’s own manufacturers.

          • One Anonymous Bloke

            NZ cannot compete with a country that gives free global freight to it’s [sic] own manufacturers.

            Meanwhile, on Earth:

            New Zealand had a $3.6 billion goods and services trade surplus with China for the December 2017 year. This means that New Zealand earned more from our goods and services exports to China than we spent on our imports from China.

            Why anyone wants to do business in a country that lacks the rule of law is beyond me, but I’d rather base my opinions on facts thanks.

    • Ad 9.4

      Here’s the country-by-country breakdown of all intellectual property indicators:


      Note changing relative position of China, US, and Japan within the tables provided.

  10. timeforacupoftea 10

    Good on Trump and he only took a year,
    Trumps done what Obuma tried to do for 6 years.

    Why Trump is sticking with Obama’s China hacking deal
    By CORY BENNETT 11/08/2017 05:29 AM EST


  11. adam 11

    Have you ever watched the show, becasue science like most of life is built on the knowledge of our ancestors. So IP is a bit of a silly idea, think they came up with “new” ideas on their own.

    • One Anonymous Bloke 11.1

      Patents and copyrights encourage people to share their knowledge, and their novel applications of existing knowledge. Standing on the shoulders of giants is commonplace; a cliché.

      Humility fosters creativity.

      • Paul Campbell 11.1.1

        I’ve worked in the tech industry for 40 years now, 20 of those years in Silicon Valley, I have 20+ patents (owned by my previous employers). I actually disagree – I see patents as largely a negative thing, letting someone own an idea, I think it stifles innovation (for 17 years!)

        We’re in a world where time to market is everything, patents are really only useful as a defensive measure to shutdown someone who can do what you’re doing cheaper/faster/better, they force prices up and slow innovation and creativity. They are a lazy way to make a living.

        I spent a year once, back when I was a chip designer, working on an x86 clone trying to figure out how to get around an Intel patent (one that was obviously bogus, but we couldn’t afford the time or money to take it to court) – what a waste of a year when I could have been doing something creative instead.

        • One Anonymous Bloke

          I’m not sure US IP law sets a very good example.

        • Jenny

          Well said.

        • OncewasTim

          I tend to agree with you Mathew.
          I spent the best part of 15 years writing software to automate things – effectively doing myself out of a job. QUELLE SURPRISE when I discovered elements of that shit were still runninf recently. Ewew
          Life was a fucking sight easier when the needs of human beings led development rather than the possibilities and commercialism of ‘want’ (as opposed to need) became Normal Norman.
          Dangerous comment I know, given this site is designed and implemented by the Whurl’s best programmer (for which many, including me,,are grateful)

  12. cleangreen 12

    All this so called “protectionism happened on the day Dunedin lost another icon of our manufacturing in NZ as the chocolate pineapple lumps/chunks goes to our so called “trading partners” so who is kidding who here??????

    Trump is right as we are about to loose all if we don’t move to save what we have left doing it his way sunshine.

  13. Richard@Downsouth 13

    China could aborb this and lower product costs… effectively making the tarriff’s useless… they could tell America to go screw itself and call in it’s debts… China has a lot of options up its sleeve, most of which would hurt America… America doesn’t make a lot of things any more…

    Also, one thing I saw mentioned as an option to the Chinese is to make a play to have the yuan replace the USD as the traded currency for Oil overseas…

    • Exkiwiforces 13.1

      The last country that tried to replace USD for oil trading overseas for the EUD got invaded and one those jokers who was part of that wee shit fight is now Trump’s National Security Advisor.

      • Barfly 13.1.1

        True but Gaddafi’s Libya and China are a bit different in military capacity

        • Exkiwiforces

          It was Iraq as old mate Saddam was or was trying to sell his oil in Euro’s instead of USD’s. Hence the over egging of Saddam’s WMD capability which he had only the precursors for his so called WMD’s as there is a big difference between the both of them. Hell if someone wants to get real technical even little old NZ has the precursors and know how for making WMD’s we didn’t even get invaded.

          Yes you are right as well as old Gaddafi was selling in Euro’s as will at the time and the big difference in military capability as well.

  14. patricia bremner 14

    Well the “markets” are reacting to the uncertainty of trade all around the world.

    • Exkiwiforces 14.1

      It’s because of that muppet trump saying when he signed off on the Chinese Traiff this morning “This Executive Order on Chinese Tariffs is the first of many to come”.

      Meaning that South Korea, Japan and the EU are next on trumps hit list. Thence why every man and his dog are popping smoke faster than a bunch chicken stragglers doing a break contact or banging/ punching out faster than a knuckle head on a Martin Barker who’s about to spud in out of shares and into gold or government bonds etc.

      It’s going to get very rough over the next few weeks and possibly get out hand very fast to a point where it’s goes from jaw jaw to war war as a worst case scenario. As long as the war war starts after the 3rd of July then I really don’t care after that as the firm can go and **** itself as they can stick their war war up their jackise.

    • OncewasTim 14.2

      I tend to agree with you Mathew.
      I spent the best part of 15 years writing software to automate things – effectively doing myself out of a job. QUELLE SURPRISE when I discovered elements of that shit were still runninf recently. Ewew
      Life was a fucking sight easier when the needs of human beings led development rather than the possibilities and commercialism of ‘want’ (as opposed to need) became Normal Norman.
      Dangerous comment I know, given this site is designed and implemented by the Whurl’s best programmer (for which many, including me,,are grateful)

  15. patricia bremner 15

    I thought he and friends would bet on futures, like Shonkey, and make more money out of it?
    Why is July 3 significant?

    • Exkiwiforces 15.1

      On midnight the 3rd of Jul i become a mister ( a civilian) again for the first time in 20 yrs.

      I think even having a punt on the futures and options market is very risky atm and you probably have a better return from the nags at your local racecourse or buying gold atm.

      • cleangreen 15.1.1

        Congrats Exkiwiforces,

        I got out but kept running for fitness for another twenty yrs afterwards.

      • patricia bremner 15.1.2

        Congratulations, hope you have the extra pension.xx

        • Exkiwiforces

          I will get compo as a fortnightly or take lump sum payment which is separate from my Mil super medical pension and DVA tops it up to my current my pay scale also that includes any allowances as well plus the DVA gold card if I’m over 60pts which I’m currently sitting on 58pts with another 15- 20 odd claims to go.

          • patricia bremner

            Good wishes for your health, points and smoothly reaching 3rd July midnight without a hiccup. The last bit always feels the longest.

    • Ad 16.1

      PLus it’s Indian-owned! My Bad!

      • Pat 16.1.1

        Not so bad…there was a Chinese connection at one stage.

      • OncewasTim 16.1.2

        Not so bad @Ad.
        Wouldn’t be the first time your slip was showing (going forward Darl
        D’ya rekon Stevie Cho7ice and a cupple of other Ayshun other bois….ah no, thats right – what plays in Vegas stays in Vegas
        (Excepr as an early morning walker, I don’t think I ever signed up to those rules)

        • OncewasTim

          And may I say I think you’re just gorgeous and that aĺl you ADvocate for who have genuinw concerns shoyl just pragmaticaĺy ‘nove on’ (in true H1/H2 stylejlm).
          Please don’t moan your tits off though when yoù try for FTAs with people who actually ccare about how their nationals are treated.

          • OncewasTim

            You know
            …as I passed the NZHC in Delhi after going toba yrain museum, and lòoked at the Immigeation NZ signs as I passed, both the tuktuk drivet (highly stray yun qualfied) and I just larfed our fucking arses off

  16. george.com 17

    I was reminded of some words from a Bruce Springstein song this morning, My Home Town:
    Now main streets whitewashed windows and vacant stores
    Seems like there aint nobody wants to come down here no more
    They’re closing down the textile mill across the railroad tracks
    Foreman says these jobs are going boys and they aint coming back to
    Your hometown

    The was written in 1983 about the hollowing out of US manufacturing. Partly the loss of uneconomic firms and jobs, but also the rush for US firms to relocate overseas where labour was cheaper and more compliant, such as China, and bigger profits could be made

    • Wei 17.1

      Really, who gives a shit about what happens to Americans —-is it because they are white?

      I’m more interested in the rise of a prosperous middle class in Asia, and increasingly in Africa:

      Americans and the West plundered Africa and Asia to get to their current economic status, and still hog a wildly disproportionate share of the world’s reasources.
      So whatever happens to them should be the least of our concerns.

      • One Anonymous Bloke 17.1.1

        they are white

        “White” people make up 73% of the US population. The US census bureau defines “white” as:

        A person having origins in any of the original peoples of Europe, North Africa (i.e. Morocco, Algeria, Tunisia, Libya, and Egypt), and the Middle East (i.e. West/Southwest Asia, including Arabs, Assyrians, Bedouins, Jews, Kurds, Iranians; as well as Turkic peoples).

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