China Vows Fight After Trump Signs Tariff Memo

- Mar 23, 2018-

"If somebody tries to impose a trade war upon us, we will fight," Chinese Ambassador to the US Cui Tiankai said after US President Donald Trump on Thursday signed off on a plan to impose tariffs on imports from China and restrict Chinese foreign direct investment.

"We will do whatever we can to defend the legitimate interests," Cui said in a video posted on the embassy Facebook account. "Let me assure those people who intend to fight a trade war. We will certainly fight back. We will retaliate. If people want to play tough, we will play tough with them and see who will last longer."

The US memorandum directs Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to respectively come up with specific plans on the tariffs and on Chinese FDI in the US.

The memo is a result of a Section 301 investigation under the US Trade Act of 1974 into China's laws, policies, practices or actions related to technology transfer, intellectual property and innovation.

While the memo posted on the White House website did not give a specific amount of the tariffs, Trump said on Thursday "it could be about $60 billion".

Also, unlike executive orders that take legal precedence and cannot be changed by a memorandum, a US presidential memorandum can be amended or rescinded by executive orders or another memorandum.

Trump said the two countries are in the midst of a large negotiation.

"We'll see where it takes us. But in the meantime, we're sending a Section 301 action," Trump said at the signing ceremony.

The move has drawn firm opposition from US businesses and lawmakers.

Lighthizer was grilled on the economic impact on US states at a Senate hearing on Thursday and at a similar session at the House of Representatives on Wednesday.

The US Chamber of Commerce and major US retailers earlier sent a letter and statement to Trump urging he not proceed with the broad tariffs on China.

"What avenues are we going to take to protect the $7 billion export agriculture market from my state from being retaliated against in this trade war that the president is basically embracing?" Maria Cantwell, a Democratic senator from Washington, asked Lighthizer.

"It's not something I think that in an economy like in the state of Washington, which is so trade dependent, is ready to embrace," she said. "They look at this 1980s view as a very retro policy: 'Let's start a trade war.' We'd like something more sophisticated."

China will "take all necessary measures" to resolutely protect its legitimate rights and interests that might be hampered by the possible US initiation of a Section 301 investigation into the country, the Ministry of Commerce said on Thursday.

Under the memorandum, Lighthizer will consider whether the US response should include increased tariffs on goods from China, and if so, he should publish a proposed list of products and any intended tariff increases within 15 days of the memorandum. A final list would be published to implement any tariffs after a period of notice and comment.

At Thursday's hearing, Lighthizer indicated that Chinese products and industries in the "Made in China 2025" strategy will be the primary targets.

The memorandum directs Mnuchin to address concerns about Chinese FDI in the US and report the progress within 60 days of the memorandum.

Foreign Ministry Spokeswoman Hua Chunying said the two countries have remained in close communication on trade issues at various levels.

Constructively resolving differences and friction, and safeguarding the healthy and stable growth of bilateral trade are the consensus of both countries' leaders, she said on Thursday.

US export restrictions on China are a factor in the trade imbalance, she said, adding that a complete trade balance is unrealistic and unreasonable, and it's not fair to accuse only China.

"I hope both sides sit down to conduct constructive dialogue and consultation and pursue mutual benefits and win-win results based on equality and mutual respect," she said, adding that China and the US can be positive role models in maintaining the stability of the global economy.

Trump also said that he views China as a friend.

"I have tremendous respect for President Xi," he said. "We have a great relationship. They're helping us a lot in North Korea.

"But we have a trade deficit ... there are many different ways of looking at it, but no matter which way you look at it, it is the largest trade deficit of any country in the history of the world," Trump said.

Zhang Monan, a researcher at the China Center for International Economic Exchanges, said the Trump administration needs a way to attract votes for the midterm elections in November.

"It is unwise to stop effective official talks," Zhang said. "The current situation certainly needs constructive talks to resolve issues."

Tu Xinquan, a professor of international trade at the University of International Business and Economics in Beijing, said a trade war could push China to seek more technology partners from Europe to the detriment of US firms.

The memorandum was signed just a day before the Section 232 steel and aluminium tariffs are expected to be imposed.

But Lighthizer said on Thursday that in addition to the exemptions for Mexico and Canada, the tariffs on countries in the European Union, Brazil and Argentina — all major steel exporters to the US — will be put on pause. Japan, however, remains on the list.

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