Trade Wars: The (Chinese) empire strikes back

I still don’t know if trade wars are “easy” or not, as the President recently claimed, but they’re certainly predictable. Now that we’ve put some new tariffs in place on aluminum and steel from China (among other nations), the Chinese responded last night with tariffs of their own. They’ll be imposing anywhere from 15 to 25% on primarily agricultural products ranging from pork to plums. (CBS News)

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China says it’s rolling out new tariffs on U.S. meat, fruit and other products as retaliation against taxes approved by President Donald Trump on imported steel and aluminum.

The Chinese finance ministry says in a statement that the new tariffs begin Monday.

The announcement follows through on warnings Chinese officials have made for several weeks in an escalating trade dispute with the United States.

China’s Customs Tariff Commission is increasing the tariff rate on eight imported U.S. products, including pork, by 25 percent. It’s also imposing a new 15 percent tariff on 120 imported U.S. commodities, including fruits.

This is obviously a political and diplomatic signal more than an economic one. The Chinese didn’t just randomly pick the numbers 15 and 25 out of thin air as percentage values for tariffs. Those are the same levels put in place by President Trump on aluminum and steel. The thinking among much of the media this morning seems to be arriving as per the script. See? There’s no point in starting a trade war because they’ll just do the same to us and everyone winds up paying more.

Maybe. But then again, what we were doing before clearly wasn’t working. Part of the demands coming from the White House have to do with trying to force China to reduce the trade deficit we currently have with them. (Still an attainable goal if they want better trade relations.) But the other part deals with something far more serious that we’ve been battling since the early days of the cold war with little success. China is internationally famous for stealing technology from other nations and paying no heed to intellectual property rights.

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This problem really kicked into gear in the 90s with the early rise of the American tech sector in the computer industry, but it’s really never slowed down. Just this week it was revealed that the general office of the Communist Party of China had ordered their operatives to double down on recruiting Americans from high tech industries to engage in industrial espionage. (Free Beacon)

China’s Communist Party recently authorized an aggressive program of stealing U.S. science and technology information by recruiting Americans in the tech sector with access to trade secrets, according to an internal Party directive.

The directive outlines a secret program authorized by the general office of the Communist Party of China (CCP) Central Committee of stepped up technology collection beginning in late 2016 and carried out by an intelligence unit called the United Front Work Department.

The document is an approval order from the Central Committee for a “working plan on strengthening the intensity of United Front Work in the area of science and technology of the United States in 2017.”

The Chinese call it “technology collection.” United States courts refer to it as theft and industrial espionage. Our previous policy towards China on this matter mostly consisted of clucking our tongues and asking them to stop. Shockingly, that hasn’t been terribly effective. So what are we supposed to do? As I said above, I still don’t know if this sort of bare-knuckle trade aggression will be effective in the long run, but at least we’re letting them know we’re serious.

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None of these measures are permanent or irrevocable. Our own tariffs (and those of the Chinese as well) can be lifted with the stroke of a pen just as easily as they were put in place. But for the time being, we’re clearly trying something new.

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