FOLLOWING THROUGH on previous threats, President Trump announced on Monday new tariffs on $200 billion worth of imports from China, in addition to levies previously imposed on $50 billion worth of goods. The taxes, which go into effect Sept. 24, were not quite as stiff as Mr. Trump initially proposed: 10 percent rather than 25 percent, on a range of goods from which popular consumer items such as bike helmets and smartwatches have strategically been omitted. Still, the tariff will increase to 25 percent by the end of the year unless China agrees to do what the president wants, which, he said, is “to give fair and reciprocal treatment to American companies.” Beijing’s answer so far: to prepare retaliatory tariffs on $60 billion worth of U.S. goods, despite Mr. Trump’s threat to respond with yet another round of U.S. levies if it does.
Mr. Trump has embarked on a risky course that could leave the United States worse off, despite the validity of his broad complaints against China — that its mercantilist policies systematically force U.S. firms to give up cutting-edge technology as a condition of operating in China; that Beijing protects its domestic market through a series of tariff and non-tariff barriers; and that the Communist-run country envisions using such methods to achieve global dominance in key technologies through a program known as Made in China 2025.
Nevertheless, Mr. Trump does enter this latest round of his trade war in a slightly improved position because of his willingness to ease tensions with other U.S. trading partners that he had previously inflamed. He renewed the Korea-U.S. free trade agreement, struck a tentative deal with Mexico and papered over differences with the European Union. Key matters remain unresolved, including U.S. tariffs on imported steel and aluminum, spuriously justified on national security grounds, and the inclusion of Canada in the deal with Mexico. Yet Mr. Trump no longer approaches China quite as isolated from the rest of the world as he had previously. And the rest of the world shares many U.S. concerns regarding Chinese policies.
In addition, the huge U.S. trade deficit with China paradoxically aids Mr. Trump, at least in the short term, because it means there are many more Chinese exports for the United States to tax than vice versa. Therefore, China’s growth stands to suffer more than the United States does, again, in the short term.
The problem, as always, is whether Mr. Trump’s goal is to accumulate leverage for use in a near-term negotiation or to discourage trade with China permanently as a matter of policy. The former might be a legitimate strategy, the latter a recipe for long-term loss of the benefits that could flow from freer trade — for both countries. At the moment, it looks distressingly as though the president wants to pursue the latter course, because he has left the Chinese guessing as to what sort of agreement he might find acceptable, short of their capitulation. Mr. Trump’s aides, nevertheless, say they want “serious talks.” Now would be a very good time for them to back that claim up.