- China has filed a World Trade Organization (WTO) challenge against U.S. President’s latest tariff threat, stepping up its diplomatic efforts to counter U.S. pressure in a spiraling technology dispute.
- The Trump administration has criticised the WTO as it was unable to deal with the problems posed by China.
- The U.S. imposed 25% tariffs on $34 billion of Chinese goods in response to complaints that China pressurizes the companies to hand over technology.
- Chins responded immediately by imposing identical penalties on a similar amount of American imports.
- The recent move of China is unusually swift, coming less than one week after the U.S. proposed 10% tariffs on a $200 billion list of Chinese goods.
- China has criticised the latest tariff threat but has only about $80 billion of annual imports left for penalties.
- Beijing has stepped up diplomatic efforts to recruit support from Europe, South Korea and other trading partners but so far without success.
Why U.S. is imposing tariffs?
- China introduced its strategic industrial promotion policy- Made in China 2025.The unfair intellectual property and technology transfer practices under it are said to cause harm to the US economy.
- They allegedly coerce US companies into transferring technology and intellectual property to domestic Chinese enterprises.
- The proposed list of products was thus based on an extensive inter-agency economic analysis of the harm.
- The measure thus targets products that benefit from China’s industrial plans while minimizing the impact on the US economy.
- Also, the issue of US’s huge trade deficit with China is highlighted as a reason.
U.S- China Trade
- The U.S. trade deficit with China was $375 billion in 2017.
- The trade deficit exists because U.S. exports to China were only $130 billion while imports from China were $506 billion.
- The United States imports consumer electronics, clothing, and machinery from China.
- A lot of the imports are from U.S. manufacturers that send raw materials to China for low-cost assembly.