Trump’s Threats May Cause US-China Trade War

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The global economy may be under threat if President Donald Trump’s administration acts on continued threats made against China on trade.

Bloomberg has reported that US officials are gearing up to investigate China over what the administration perceives to be violations of intellectual property.

A government official spoke on condition of anonymity because the probe hasn’t been announced.

The New York Times has also reported that the administration is considering having the US Trade Representative’s office investigate the matter under section 301 of the Trade Act of 1974, which allows the president to impose tariffs to protect US industry from foreign countries’ unfair trading practices.

If the US launches the probe, it will be the latest of several the administration is conducting that could affect trade ties between the world’s two biggest economies.

The Commerce Department is probing whether steel imports from China and other foreign producers threaten national security under another seldom used legal provision, section 232 of the 1962 Trade Expansion Act.

Trump recently backed away from threats to slap tariffs on foreign steel.

He took heat from Group of 20 nations and US businesses that said the move would raise costs.

Trump has stated that the promise of cooperation from Chinese officials to help rein in North Korea was the reason why he didn't label China a currency manipulator.

In a report earlier this year, the United States Trade Representative (USTR) said China hadn’t done enough to lift barriers to US exports and investment, despite promising to open up when it joined the WTO in 2001.

USTR said Chinese companies continue to benefit from the theft of trade secrets, and government policy often forces foreign companies to transfer technology.

The question is whether US officials are willing to risk a trade war as they up the ante.

The International Monetary Fund warned last month that “inward-looking” policies could derail a global recovery that has so far been resilient to raising tensions over trade.

“We can try to hit China with punitive tariffs,” said Warren Maruyama, a former USTR general counsel and trade partner at Hogan Lovells in Washington. “The downside of course is they can hit back.”

Technical Paper: The Chinese Port System: Competition and Cooperation

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