Following months of investigations by the U.S. Trade Representative Robert Lighthizer, the Trump administration announced today at a White House briefing that the administration intends to place about $60 billion of tariffs on Chinese goods, with the bulk of them likely to be focused on the high-tech industry. The White House will announce a final list of goods subject to the tariffs in the next few weeks.
“We’ve lost over a fairly short period of time, 60,000 factories in our country. Closed, shuttered, gone. 6 million jobs at least, gone. And now they are starting to come back,” President Trump said during the briefing. “The word that I want to use is reciprocal – when they charge 25% for a car to go in, and we charge 2% for their car to come into the United States, that’s not good. That’s how China rebuilt itself.”
Vice President Mike Pence was even more blunt, saying that “the era of economic surrender is over.”
The final size of the tariffs was higher than numbers circulated this morning by the New York Times and Bloomberg, which had indicated about $50 billion in tariffs. Previously circulated numbers ranged from a low of $30 billion to a high of $100 billion, so the number that the White House seems to have settled on is in the middle of the hypothetical range.
The United States is a major importer of goods from China, hitting an all-time high trade deficit of $375.2 billion in 2017. Tariffs on electronics and other high-tech goods portends both potentially higher prices for consumers as well as assemblers, and would also likely encourage at least some Silicon Valley tech companies to move their manufacturing and assembly work out of China to other countries and possibly even on-shored back to the U.S.
In addition to the tariffs, the White House announced that the Treasury Department will put in place restrictions on Chinese investment in tech companies based in the United States. There are not comprehensive details at time of publishing on exactly what those restrictions are, but we will report them when we have more information.
Visa restrictions, which had been floated as another tactic to fight China, were not included in the announcements so far, but more action is possible by the White House.