President Trump has moved to impose a wide range of tariffs on Chinese products but pending tariffs on steel and aluminium would now aim them primarily at China.
According to the New York Times (NYT), The White House said it was taking action in retaliation for China's use of pressure and intimidation to obtain American technology and trade secrets [by such measures as imposing tightly regulated joint ventures and mandatory technology transfer on foreign firms wanting to operate in China – ed].
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The tariffs will affect about US$60bn of goods shipped from China to the US a year while the Chinese government plans tit-for-tat action against $3bn of US goods, primarily in the food sector.
"We have one particular problem," the NYT cited the president as saying before signing on the order that would impose tariffs on hundreds of Chinese products, from shoes and clothing to consumer electronics.
"We have a tremendous intellectual property theft situation going on."
"We repeatedly aired our concerns about China," said Peter Navarro, director of the White House National Trade Council and a key architect of the measures.
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By GlobalData"What the United States is doing is strategically defending itself from China's economic aggression."
According to the paper, the US trade representative issued a lengthy report outlining a pattern of predatory behaviour by the Chinese, including forcing American companies to transfer valuable technology and trade secrets, and "systematic" data theft by China through hacking of American computer systems.
In addition to the tariffs, the NYT added, the US Treasury Department would restrict Chinese investment in American technology firms – a practice that officials said China uses to nurture its own "national champions" in cutting edge industries like artificial intelligence and autonomous vehicles.
The administration's increasing focus on punishing China was evident in its decision to exempt allies like the European Union, South Korea, Brazil, Canada and Mexico from what were supposed to be worldwide tariffs on steel and aluminium imports. The levies, which go into effect today, Friday 23 March, will now largely hit China.
Affected Chinese goods, of which the US imports far more from China than it exports, include computers and electronics, electrical equipment, machinery except electrical, fabricated metal products, leather and similar products, chemicals, plastics and rubber products, textile mill products and non-metallic mineral products.
Moody's: Impact manageable for rated Chinese companies
Meanwhile, Moody's Investors Service said the US plan to impose tariffs on Chinese imports and China's planned reciprocal tariffs would have a limited effect on Moody's-rated Chinese companies.
It said the White House announcement was the most significant of a series of trade measures undertaken by the US Administration so far.
Based on Moody's initial assessment, the impact on Moody's-rated Chinese companies would be manageable, because most of these companies rely
heavily on domestic markets, and for companies exporting to the US, such exports generally account for only small portions of their total sales.
Moody's also said the planned Chinese tariffs on imports from the US would unlikely disrupt the supply chains of Chinese companies.
The planned US tariffs specifically target high tech sectors in China, including aerospace, information communication technology and machinery.
Accordingly, the immediate impact could be material only to the manufacturers and suppliers in these sectors, with sizeable exports to the US.
However, the negative impact could be greater, if both the US and China significantly expand tariffs and adopt other material and broad-ranging
protectionist measures. In addition, there could be indirect, second-round effects, through supply chains and the respective domestic economies, which would result in a deeper impact.
The US measures followed a 301 investigation led by the US Trade Representative into China's alleged unfair trade practices with the US.
The US Trade Representative will publish a list of targeted products in 15 days, with a 30-day period for public comment.
Moody's said it would make a more detailed assessment on the credit implications for Moody's-rated Chinese companies affected by US tariffs, once the
extent of tariffs and the type of products were disclosed.
