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Thomas Gallatin / February 14, 2019

Tariff Deadline Looms Over U.S.-China Negotiations

Trump is open to postponing $200 billion in new tariffs on Chinese goods.

Another round of trade talks between the U.S. and China kicked off on Thursday in Beijing as the two countries seek to negotiate an end to the escalating trade war. March 2 is the deadline for President Donald Trump’s $200 billion increase in tariffs against Chinese goods to be initiated. However, Trump indicated that he’s willing to delay the deadline a further 60 days should the negotiations yield positive results.

Trump’s tariffs get all the attention, but the issue at the heart of the trade war is China’s long record of abusive trade practices, particularly related to the theft of foreign-based companies’ technology. As the Associated Press reports, “Trump raised tariffs in July over complaints Beijing steals or pressures companies to hand over technology. The dispute includes cyber-spying traced to China, the country’s multibillion-dollar trade surplus with the United States and support for state industry.”

Clearly, Trump’s trade war with China is aimed at leveling the playing field and ending unfair trade practices, and insomuch as it delivers on that, it’s a good thing. That said, a fair market free of tariffs should be the ultimate goal, which will produce the most benefit to Americans and foreign nations alike. In the meantime, the tariffs are a somewhat painful but necessary “medicine.” What needs to be guarded against is the propensity for crony capitalism, as businesses that benefit from these tariffs may lobby to permanently establish them. Other companies are, of course, paying through the nose, and those costs are passed along to the consumer.

The president seems to be calculating that America can better absorb the economic impact of tariffs than China can. Indeed, with Chinese economic growth slowing to a three-decade low, and the U.S. economy jumping into high gear, Beijing may finally be willing to agree to real changes. That remains to be seen, but it appears that Trump is optimistic, as are a majority of American businesses.

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