Will Back And Forth Over Tariffs Turn Into A U.S.-China Trade War?
SCOTT SIMON, HOST:
The United States and China have been trading tariffs all week. President Trump announced $60 billion in new tariffs on Chinese imports. Shortly thereafter, China responded with $3 billion in tariffs on U.S. products. Will the back-and-forth break out into a trade war? David J. Lynch, global economics correspondent for The Washington Post, joins us now. Mr. Lynch, thanks so much for being with us.
DAVID J. LYNCH: Sure.
SIMON: President Trump, of course, announced these tariffs after the U.S. trade representative conducted an investigation of China's practices against U.S. companies operating in China. The complaints have been around for years. But what are the Chinese practices that President Trump in particular doesn't like?
LYNCH: Sure. Well, the tariffs are aimed in particular at a practice referred to as force technology transfer. The Chinese government for years has treated foreign companies, U.S. companies in particular, with what the U.S. regards as discriminatory practices.
If an American company wants to enter the Chinese market, they need to do so with a Chinese partner. The Chinese partner controls the joint venture - 51 percent. And they're required - the U.S. company is - to turn over their trade secrets, their advanced technology as a condition of market entry, as a cover charge, if you will, for getting in. And that puts the U.S. in the long run at a disadvantage.
SIMON: Yeah. But at the same time, why do so many people seem to believe that tariffs are not a good way to address that problem?
LYNCH: Well, because at the end of the day, tariff is just a fancy word for a tax, and it's a tax that's paid by Americans. The people who pay the tariff are the ones who are bringing the Chinese products into the United States. And those are American companies and, ultimately, American consumers.
SIMON: Why do you think the Chinese government responds to $60 billion in tariffs with just $3 billion in tariffs?
LYNCH: I think the Chinese are playing a very savvy game thus far or trying to. And the objective is to be firm enough to look as if they're responding and not taking any guff from an outside power...
SIMON: Three billion dollars is $3 billion.
LYNCH: Three billion dollars is $3 billion. And to the la bai sheng (ph), the average guy in the streets of Beijing, he'll hear that the Chinese government has stood tall. But the Chinese also want to look like the adults in the global room. They want to look like the guardians of the global trade regime, the rules-based international order that the U.S. built in the post-war era. And they want to try and avoid this getting out of hand.
As the Chinese ambassador to the U.S. said yesterday, we don't want a trade war. But if you push us into a trade war, we'll fight it.
SIMON: Do you foresee this escalating, or will both sides take an opportunity to say, what were we thinking?
LYNCH: You know, I've been wrong with most of my predictions about Donald Trump for two and a half years. But I think you saw language in his statement Thursday that indicates the aim of this, despite all the disparagement by the administration of negotiations and statements that the way that presidents of both parties have tried to bring China into the international system through endless dialogue.
Despite the disparagement of that, you know, Wilbur Ross said yesterday, I think we're going to be negotiating over these, not fighting over them.
SIMON: Mr. Ross, the secretary of commerce?
LYNCH: Yes. And the president said more than once, we're engaged in a big negotiation. And so I think there are - certainly, some people are hoping, fingers crossed, that that's what this is ultimately all about.
SIMON: So the tariffs are a way of essentially negotiating debt?
LYNCH: Possibly. I mean, there's precedent for that with the tariffs that the president put on just two weeks ago on steel and aluminum imports, which he's already walked back.
SIMON: David J. Lynch, global economics correspondent for The Washington Post, thanks so much.
LYNCH: Sure. Transcript provided by NPR, Copyright NPR.