Trump's Plan For China Tariffs Could Lead To 'Collateral Damage On Both Sides'
ARI SHAPIRO, HOST:
If he's confirmed, Terry Branstad will be the go-between for Trump and China, which will be tricky, given Trump's campaign promise to slap Chinese goods with tariffs of up to 45 percent. For more on whether Trump could actually make good on that promise, we've called on Mark Wu. He teaches international trade law at Harvard Law School, and he's a former U.S. trade negotiator. Welcome back to the program.
MARK WU: Thank you, Ari.
SHAPIRO: Before we get into this tariff question, what do you make of Trump's selection of Terry Branstad, who has such a long history of ties with China?
WU: I think it's an excellent choice. Obviously, when you have two major powers with the possibility of conflicts, one of the key roles of an ambassador is to make sure that there's no misunderstanding in communications. And Governor Branstad clearly has both the trust of the president-elect, as well as a longstanding relationship with President Xi. I think the personal aspect of this should not be discounted, and I think it's a good choice.
SHAPIRO: Let's dig into this question of whether Trump could put this 45 percent tariff on Chinese goods coming into the U.S. Would he need congressional approval to do that?
WU: There are certain things that would require additional congressional authority - for example, if he wanted to impose a blanket, across-the-board 45 percent tariff. But there's a number of different ways he could impose a tariff without going back to Congress. One would be to do this on a temporary basis, but only up to 15 percent for up to 150 days. Another would be to use existing trade remedies laws to go back at specific Chinese products on a case-by-case basis where the president or a U.S. industry is asserting that China is dumping its goods into the U.S. market or benefiting from illegal subsidies.
SHAPIRO: How seriously do you think people should take Donald Trump's threat to raise taxes so steeply on Chinese imports?
WU: I think we will see tariffs go up on a number of different goods. The question is what sort of tactic he will use. I think the easier one for him to do, because he would not have to go back and seek congressional authority, would be to use the trade remedies laws and do this on a case-by-case basis. This is certain to provoke some level of retaliation from the Chinese, and so he'll have to be careful about balancing that against the harm that's going to come as a result of retaliation. But he's made clear that he thinks the status quo enforcement of rules is not adequate and that he plans to use the full range of instruments available to him to address that.
SHAPIRO: What happens if China and the U.S. get into some kind of tit-for-tat trade war with each hiking taxes against the other?
WU: I think there'd be collateral damage on both sides. It would be a question as to who blinks first or whether they're able to negotiate some sort of understanding to bring that chapter to a close. But from the U.S. domestic side, you're really playing off one constituency against another. So you're talking about putting in tariffs to help steel producers at the expense of, say, farmers in Iowa and the like.
SHAPIRO: So when you say collateral damage, you mean farmers whose products are sold to China would suffer?
WU: Farmers whose products would be sold to China - it's a major export market for many, many states, including Iowa. The other products would be electronics, airplanes, even services. The Chinese could retaliate on several different fronts.
SHAPIRO: If you were a soybean farmer in Iowa, would you be worried?
WU: I certainly would. I don't think the Chinese are going to take this sitting down. The last time the U.S., after the Great Recession, imposed trade remedies against a number of different Chinese products, the Chinese hit back with trade remedies of their own against U.S. chickenfeed, against US car makers and the like.
So it's simply a question of - if I am a soybean farmer - of whether they're going to hit back against me versus another product. And given the fact that agriculture goods are critical to the industrial Midwest, which was a key part of the president-elect's support, I would expect that they would target a certain range of those goods. It's just a question of whether it's me or the corn farmer or the pig farmer that's going to get hit with this retaliation.
SHAPIRO: That's Mark Wu of Harvard Law School, speaking with us about Trump's threat to impose a 45 percent tariff on Chinese goods.
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