Donald Trump raises the stakes with warning of tariffs on China

US President Donald Trump is considering wide-ranging tariffs on consumer imports from China in a bid to reduce the growing trade imbalance between the two countries. (AFP)

WASHINGTON: President Donald Trump is considering sweeping tariffs on imports from China, with an announcement possible as early as next week.
The move has industry groups and some lawmakers scrambling to prevent the next front in a potential trade war that could reverberate across the US economy.
Early indications from the White House have officials braced for tariffs across a wide variety of consumer goods, from apparel to electronics, and even on imported parts for products made in the US.
The size and scope of the tariffs remain under debate, but the US Chamber of Commerce is warning that annual tariffs of as much as $60 billion on Chinese goods would be “devastating.”
Trump’s focus on China could be even more consequential, both at home and abroad, than the recently announced penalty tariffs on steel and aluminum.
Amid the staff turmoil at the White House, the move is being read as a sign of rising influence for the administration’s populist economic aides, led by Commerce Secretary Wilbur Ross and adviser Peter Navarro.
Even Larry Kudlow — an avowed free trader tipped to replace Gary Cohn as director of the White House National Economic Council — has said that China deserves a “tough response” from the United States and its friends. He told CNBC this week: “The United States could lead a coalition of large trading partners and allies against China.”
But with these tariffs, the Trump administration appears to be content to go it alone.
On Friday, the National Retail Federation, which recently hosted industry groups to organize opposition to another round of tariffs, convened a conference call to update its members. “They’re all concerned about this,” said David French, vice president for government relations. “Tariffs are a tax on consumers and they’re best used sparingly as tools.”
Trade experts and economists say the tariffs could lead to rising prices for US consumers and businesses without accomplishing one of the president’s stated goals: reducing last year’s trade imbalance of $566 billion.
China, the largest source of the trade imbalance, would likely respond to any tariffs by retaliating with higher import taxes on US goods, among other possible restrictions.
“They signaled that they will aim at things that affect the United States politically as well as economically,” said Claude Barfield, a scholar at the conservative American Enterprise Institute and former consultant with the US trade representative.
“The farmer in Kansas or Iowa could feel it,” he said. “US high- tech companies could feel it because the supply chains for iPhones go through China.”
Lawmakers on Capitol Hill, who have largely been shut out of administration deliberations, fear tariffs would stunt economic benefits in the US that could be stemming from the GOP tax cuts.
Republican leaders, including House Speaker Paul Ryan of Wisconsin and Rep. Kevin Brady of Texas, chairman of the Ways and Means Committee, have urged the administration to target any proposed tariffs as narrowly as possible, away from US allies and focused on countries engaged in over-production and product dumping.
Republicans in Congress largely opposed Trump’s steel and aluminum tariffs and are working with the administration on a process for allowing waivers or carve outs for certain countries or types of metals, beyond the exemption the White House is allowing for Canada and Mexico.
The new tariffs on China would be tied to an investigation into the country’s failure to stop intellectual property theft, a probe that was launched in August as part of the rarely used Section 301 of the Trade Act of 1974.