CHINAMacroReporter

'Trump's tariffs just first shot—the big China action is Section 301'

Leland points out that President Trump's really big trade move against China yet to come, that is, Section 301 penalties. If you aren't up to speed on 301, you will be after you read and watch Leland's comments. As Leland says, with Section 301, 'regardless of how Section 232 steel and aluminum tariffs end up in the next few days - you're seeing the beginning, not the end, of Trump's aggressiveness on trade.' 'And, I don't think people have prepared themselves yet for the fact that 301 is coming.'
by

|

CHINADebate

March 1, 2018
'Trump's tariffs just first shot—the big China action is Section 301'

1. 'Today's tariffs just Trump's first shot - the real China action is Section 301'

[Note: If you're not up on the difference - and it's a vitally important difference - Section 232 and Section 301, please go to part 2, below.]

Leland Miller, CEO of China Beige Book told me: 'Donald Trump just announced several minutes ago that he was indeed going forward with Section 232 tariffs on steel and aluminum. Here's my take and some context.'

'When the Trump administration was originally developing the strategy for responding to China trade problems, they evaluated two major lines of attacks using tariffs.'

  • 'One line of attack was Section 232 - that's what you're hearing about today.'
  • 'Today's 232 move is just for steel and aluminum tariffs, it's not China specific, and it's something that relies on the ability of the White House to be able to say, "National security dictates that we regulate these imports with particular tariffs."
  • ''The big problem with that as a China move: China is not a major exporter steel or aluminum to the U.S. So, this is not really something that's going to hit China particularly hard directly.'
  • 'Indirectly, this will hit China. China has been sending its steel through third-party countries in Southeast Asia and elsewhere so that it comes into the U.S. not identified as Chinese. Today's action is partly designed to stop this.'

'But, because these are tariffs on global imports, this is going to upset a lot of America's strongest allies.'

  • 'You're already having foreign delegations rush to the White House right now to lobby to get them out, carve them out.'
  • 'Trump hasn't signed anything yet. So, you could see carve outs for allies in the final document.' 

'What the President might do after making such a splash today brings us to the other line of attack: Section 301.'

  • 'Section 301 has always been the White House's underlying platform - its center- for the anti-China assault on the trade side.'
  • Why? 'Unlike Section 232, Section 301 targets unfair trade practices, not products; and it targets a specific country, not the whole world.'
  • 'So, with 301, the President has the power to basically do whatever he wants to China on the tariff side in order to deal with the fact that the Chinese have been stealing intellectual property and a 301 investigation has found them guilty of that.'

'In response, he has the option to either have a very mild action or something that would be much larger than what he announced today with Section 232 tariffs on steel and aluminum, much more severe.'

  • 'If he went for something severe, such as broad sectoral tariffs - tried to take down, say, China consumer electronics - then, you would have justifiable reason to call this a trade war.'

'With today's 232 tariffs on steel and aluminum, there was actually strong opposition across the government, across the administration. Even within the White House where, except for a handful of people, advisors were very, very against this - they think Trump's opening up Pandora's box.'

  • 'So, it's interesting that there's not much opposition to the country-specific Section 301.'
  • '301 is likely to go forward as planned. We just don't know how big yet.'

'How big 301 actions will be depends on how this 232 tariffs saga ends up'.

  • 'As I mentioned, if 232 goes forward in anywhere close to the current way it's being described by the President, it is absolutely against the wishes and inclinations of almost everyone, within most of the industries, even within the Trump White House.'
  • 'Republicans in Congress don't want it, either. So there's a lot of politics to this.'
  • 'The President's backed himself into a little bit of a corner - I think you're most likely going to see 232 going forward, but the chances are that it gets pulled back some.'
  • 'All this is something that's going to have to be sorted through before the President decides whether these 232 tariffs are enough, whether he has to pull 232 back a bit, or whether he wants to go even bigger with 301.'

'The President's impulse seems to be to go bigger. And 3o1 - it's faster, it's louder, it's bigger, than other routes, such as going through WTO processes.'

  • 'Section 301 essentially allows the President to right the wrongs that he believes have not been dealt with by the WTO.'
  • 'Wrongs that in his mind and in the minds of Wilbur Ross and Peter Navarro and Bob Lighthizer that the Chinese have been committing for years, for decades now.'
  • 'Where WTO has not done anything about them, and other Presidents have not done anything about them, he will.
  • 'And, quite frankly, what the President wants here is a big splash - if he uses 301, he can show that his campaign rhetoric about being a strong warrior on trade is credible.'

'For these reasons, I believe that you're seeing right now - regardless of how 232 ends up in the next few days - you're seeing the beginning, not the end, of Trump's aggressiveness on trade.' 

'And, I don't think people have prepared themselves yet for the fact that 301 is coming.'

2. Section 232 & Section 301: The Difference

Leland Miller explains the difference between Section 232 (Trade Expansion Act of 1962) and Section 301 (Trade Act of 1974).

'Broadly speaking, these are two very different measures.'

  • 'Section 232, is product specific and focuses on whether imports of that product threaten U.S. national security. The President can take any actions to “adjust the imports of an article and its derivatives” or other non-trade related actions he thinks are necessary to protect national security.'
  • 'Section 301 is country specific and allows the U.S. to impose trade sanctions on foreign countries that either violate trade agreements or engage in other unfair trade practices.'

'The Section 232 tariffs the President has announced today are specifically for steel and aluminum.'

  • 'Steel and aluminum are each the subject of an active 232 investigation and their imports have been deemed threats to national security.'
  • 'Because of these findings, the President has declared their import  threats to national security, and that's why he's taking action on them.'
  • 'When he signs the tariff orders, the effect is global. That means, the President is putting steel and aluminum tariffs on imports from everywhere around the world, but he can carve out certain countries to be exempt.'

'Section 301 is very different -  it's country specific, not product specific.'

  • 'Section 301 has to do with unfair trade practices - in this case, it is intellectual property theft, and it is a China-specific investigation that nailed China.'

 'The idea behind how to push an aggressive trade front against China has always been centered around 301.'

  • 'That's the way you really get at China, not through 232, which is global, but through 301, which allows China-specific application.'

More

CHINAMacroReporter

February 19, 2021
‘No, China is not the EU’s top trading partner'
‘This week the media seized on a report by Eurostat, the European Union’s statistical agency, to declare that China surpassed the United States in 2020 to become the EU’s main trade partner. This is simply not true.’
keep reading
February 18, 2021
‘China faces fateful choices, especially involving Taiwan’
'Should Mr Xi order the People’s Liberation Army to take Taiwan, his decision will be shaped by one judgment above all: whether America can stop him. If China ever believes it can complete the task at a bearable cost, it will act.’ ‘
keep reading
February 18, 2021
'An Unsentimental China Policy'
'Jake Sullivan, wrote in Foreign Affairs in 2019, “The era of engagement with China has come to an unceremonious close.”Yet it is worth remembering what engaging China was all about.’ For most of the past half century, efforts to improve ties with the country were not about transforming it. Judged by its own standards, U.S. engagement with China succeeded. It was only after the Cold War that a desire to change China became a prominent objective of U.S. policy.’
keep reading
February 18, 2021
'Like It Or Not, America Is Still A Superpower'
‘The twentieth century was littered with the carcasses of foreign leaders and governments that misjudged the United States, from Germany (twice) and Japan to the Soviet Union to Serbia to Iraq. Perhaps the Chinese, careful students of history that they are, will not make the mistake that others have made in misjudging the United States.’
keep reading
February 16, 2021
'Is China experiencing an advance of the state sector?'
‘The value-added produced by state-owned enterprises has usually been in the range of 25-30% of China’s GDP. And what’s really striking about those numbers is that they just haven’t changed very much over the past 25 years. The share of China’s economic output being produced by SOEs today, under Xi Jinping, is not significantly different than it was under Hu Jintao, or even in the later years of Jiang Zemin.’
keep reading
February 16, 2021
‘China Blocked Jack Ma’s Ant IPO After Investigation Revealed Likely Beneficiaries’
‘Behind layers of opaque investment vehicles that own stakes in Ant Financial are a coterie of well-connected Chinese power players, including some with links to political families that represent a potential challenge to President Xi and his inner circle. Those individuals, along with Mr. Ma and the company’s top managers, stood to pocket billions of dollars from a listing that would have valued the company at more than $300 billion.’
keep reading
February 14, 2021
How to Keep U.S.-Chinese Confrontation From Ending in Calamity
'The two countries need to consider something akin to the procedures and mechanisms that the United States and the Soviet Union put in place to govern their relations after the Cuban missile crisis—but in this case, without first going through the near-death experience of a barely avoided war.'
keep reading
February 14, 2021
The United States, China, and Taiwan: A Strategy to Prevent War
‘We believe that a crisis is building over Taiwan and that it is becoming the most dangerous flashpoint in the world for a possible war that involved the United States of America, China, and probably other major powers.'
keep reading
February 13, 2021
Why China Will Go Green - Really
‘To Communist Party leaders, greenery increasingly aligns with their economic and political interests. China, a populous country that is cruelly lacking in clean water and arable farmland, and which hates having to rely so heavily on imported energy, has a selfish interest in embracing what President Xi Jinping calls “ecological civilisation”.’
keep reading
February 11, 2021
'The Biden Team Wants to Transform the Economy. Really.'
‘Biden and his more activist advisers hope to modernize key industries and counter an economic threat from China, swiftly emerging as the world’s other superpower. “The package that they put together is the closest thing we’ve had to a broad industrial policy for generations, really,” says Scott Paul, the president of the Alliance for American Manufacturing.’
keep reading
February 10, 2021
‘What the ‘Hong Kong Narrative’ gets wrong'
‘For a significant cohort of the [“pro-democracy”] protesters, the more accurate label would be “anti-China activists.” The one thing that seems to unite them is not a love of democracy, but a hatred of China.'
keep reading
February 8, 2021
Why the Anglosphere sees eye to eye on China
‘Some of America’s European allies are very wary of what they fear will be a new cold war with China. By contrast, the US is getting more support from the UK, Australia and Canada.’
keep reading
February 7, 2021
' "Longer Telegram" | To Counter China’s Rise, the U.S. Should Focus on Xi'
A strategy that focuses more narrowly on Xi, rather than the CCP as a whole, presents a more achievable objective.'
keep reading
February 7, 2021
'The Sources of Soviet Conduct'
'The main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies.’
keep reading
February 7, 2021
'Remarks by President Biden on America's Place in the World'
“We’ll confront China’s economic abuses; counter its aggressive, coercive action; to push back on China’s attack on human rights, intellectual property, and global governance.”“But we are ready to work with Beijing when it’s in America’s interest to do so. We will compete from a position of strength by building back better at home, working with our allies and partners, renewing our role in international institutions, and reclaiming our credibility and moral authority, much of which has been lost.”“That’s why we’ve moved quickly to begin restoring American engagement internationally and earn back our leadership position, to catalyze global action on shared challenges.”
keep reading
February 7, 2021
'In Search of Today’s George Kennan'
‘Kennan provided a framework to break through the bitter divide between those who believed America should return to its prewar isolationism, and those who believed the USSR was itching for a dramatic showdown with the capitalist west.’
keep reading
February 7, 2021
' "Longer Telegram" Sets Off Fierce Global Debate'
'The fierce global debate set off this week by a thought-provoking paper - “TheLonger Telegram: Toward a New American China Strategy” – has underscored the urgency and difficulty of framing a durable and actionable U.S. approach to China as the country grows more authoritarian, more self-confident and more globally assertive.'
keep reading
February 7, 2021
The 'Longer Telegram' & Its Discontents
Why everyone wants to be George Kennan‘In 1947 X penned his history-changing “Sources of Soviet Conduct” in Foreign Affairs,’ wrote Edward Luce in the Financial Times in 2018.‘The piece, which crystallised America’s cold war containment strategy, was the making of George F Kennan’s life-long reputation as a master of geopolitics.’‘ As the architect of a doctrine that won the cold war.’
keep reading
February 7, 2021
'Brookings experts analyze President Biden’s first foreign policy speech: Focus China'
'To respond effectively, Biden argued, America will need to rebuild leverage, e.g., by pursuing domestic renewal, investing in alliances, reestablishing U.S. leadership on the world stage, and restoring American authority in advocating for universal values.'
keep reading
February 7, 2021
'Why the ‘Longer Telegram’ Won’t Solve the China Challenge'
‘Perhaps the most problematic aspect of the 'Longer Telegram's' emphasis on Xi—“All U.S. political and policy responses to China therefore should be focused through the principal lens of Xi himself”—is the author’s conclusion that Washington should be seeking to escape from, and even try to effect the removal of, Xi’s leadership because that could restore U.S.-China relations to a potentially constructive path: “its pre-2013 path—i.e., the pre-Xi strategic status quo.” ’
keep reading
February 4, 2021
Why Beijing Is Bringing Big Tech to Heel
‘Beijing’s recent antitrust efforts are motivated less by worries about the tyrannical nature of monopoly power than by the belief that China’s tech giants are insufficiently committed to promoting the goal advanced by the Chinese Communist Party (CCP) of transformative technological innovation—and thus may be undermining the effectiveness of Chinese industrial policy.’
keep reading
February 3, 2021
'Secretary of State Antony Blinken on U.S. Policy Toward China'
‘There’s no doubt that China poses the most significant challenge to us of any other country, but it’s a complicated one.’
keep reading
February 3, 2021
'Burma’s Coup and Biden’s Choice'
‘The top U.S. priority in Asia is limiting Beijing’s ability to control independent states like Burma, which is strategically situated in the Indo-Pacific. The U.S. response needs to take into account China’s regional designs.’
keep reading
February 3, 2021
'Myanmar, Burma and why the different names matter'
‘Unlike most of the world, the U.S. government still officially uses "Burma." '
keep reading
February 3, 2021
'Coup a further complication for tricky Myanmar-China ties'
‘Even if China played no role at all in ousting Suu Kyi, Beijing is likely to gain still greater sway over the country.’
keep reading
February 3, 2021
‘Beijing Won’t Let America “Compartmentalize” Climate Change'
‘‘You want China to take action on climate change?" asks Xi Jinping. "Let’s talk about what you’re going to give to get it.’’
keep reading
February 3, 2021
Burma: At the Center of the U.S.-China Competition
In today’s issue: 1. China Lays Out Its Position / 2. The U.S. Lays Out Its Position / 3. Burma: At the Center of the U.S.-China Competition / 4. Burma or Myanmar?
keep reading
February 3, 2021
'A Conversation with Politburo Member Yang Jiechi'
‘History and reality have shown time and again that these issues concern China's core interests, national dignity, as well as the sentiments of its 1.4 billion people. They constitute a red line that must not be crossed.’
keep reading
February 3, 2021
'National Security Advisor Jake Sullivan on U.S. Policy Toward China'
‘Being prepared to act as well to impose costs for what China is doing in Xinjiang, what it’s doing in Hong Kong, for the bellicosity of threats that it is projecting towards Taiwan.’
keep reading
February 3, 2021
'Coup Puts Myanmar at the Center of the U.S.-China Clash'
‘Chinese oil and gas pipelines snake across Myanmar from China’s landlocked Yunnan province to the Bay of Bengal—a route that Beijing wants to transform into a broader economic corridor with road and rail connections.’
keep reading
February 3, 2021
'Biden's whole-of-National Security Council China strategy'
'National security adviser Jake Sullivan is personally focused on China as a priority, building capacity across departments and agencies and running processes that break down old silos between foreign and domestic policy.'
keep reading
January 31, 2021
'Biden’s Nightmare May Be China'
‘The coming years represent the greatest risks since I began covering U.S.-China relations in the 1980s, partly because Xi is an overconfident, risk-taking bully who believes that the United States is in decline.’
keep reading
January 31, 2021
Opinion | Marco Rubio: 'China is exploiting U.S. capital markets and workers. Here's what Biden should do.'
‘China can finance its industrial ambitions with the deepest, most liquid capital markets in the world — our own.’
keep reading
January 31, 2021
The UK Stands Up, the U.S. Not So Much
“We have honored our profound ties of history and friendship with the people of Hong Kong, and we have stood up for freedom and autonomy—values both the U.K. and Hong Kong hold dear.” British Prime Minister Boris Johnson
keep reading
January 31, 2021
'U.S.-China Capital Flows Vastly Underestimated'
‘And yet, debates around US-China passive securities investment suffer from shortcomings similar to those inherent in the early debates about US-China bilateral FDI and VC: official data do not provide a clear picture for policymakers to understand the scope and patterns of two-way investment flows and stocks.’
keep reading
January 31, 2021
'Why U.S. Securities Investment in China is Vastly Underestimated'
‘The conduits of US securities investment in China that are obscured or ignored in the US Treasury International Capital (TIC) dataset constitute a majority of all holdings, so these figures vastly underestimate the true scope at the end of 2020.’
keep reading

Heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.