Trump Considering Tariffs on Another $100 Billion Worth of Chinese Goods Under Section 301 Authority

President Donald Trump tasked the Office of the U.S. Trade Representative with looking at adding another $100 billion in Chinese goods to the $50 billion already identified as part of the Section 301 investigation. "Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers," the White House said in a release. USTR promptly responded that tripling the size of the tariffs is appropriate, and promised to assemble a list. "Any additional tariffs proposed will be subject to a similar public comment process as the proposed tariffs" announced on April 3 and "no tariffs will go into effect until the respective process is completed," the agency said.

Scott Kennedy, a China expert at the Center for Strategic and International Studies, said dryly, "The president seems to a have a high tolerance for risk." While those who oppose the use of tariffs emphasize the fact that the president has 180 days to act after USTR makes its final recommendations on both sets of targets, Kennedy said he's very doubtful Trump will wait months to act. "He could delay them some. But if he doesn’t want to be seen as just a bluffer, which is certainly the Chinese impression of him, he can’t wait forever. The longer he waits, the more domestic dissension that emerges."

Kennedy believes both sides will implement tariffs and countermeasures. But what happens then -- who blinks first in this global game of chicken -- is hard to predict, he said, even if it appears that China, as the more export-dependent country, would have less political pressure to get the tariffs lifted. "There’s not going to be Chinese shoemakers or bank owners parading outside Chinese government offices protesting or lobbying. There’s not going to be any coverage of suffering Chinese consumers," he said.

Many trade groups that depend on either Chinese imports or invest in China expressed alarm at the escalation. “It is time to wake up -- we are being marched into a trade war and the losers will be American workers, American consumers, and the American economy," the American Apparel and Footwear Association's CEO Rick Helfenbein said in a statement. "Additional tariffs only add fuel to the fire and create an environment of one-upmanship that will not solve the problem we are trying to fix. We cannot treat this like a school yard fight. This is a fight where everyone loses." The U.S.-China Business Council, whose members are those who are harmed by forced joint ventures and technology transfer in China, responded by saying, "rather than escalating threats, it is time for both governments to sit down and start working out a solution."

Daniel Griswold, a trade and immigration expert at George Mason University's Mercatus Center, said he's doubtful that the tariff threats will convince China to make real changes to its industrial policy. "It’s possible that it could. There may be a pot of gold at the end, as [administration Economic Advisor] Larry Kudlow said, but I wouldn’t bet on it. Dealing with a foreign country, especially one as large as China, is not the same as doing a real estate deal in Manhattan. Countries don’t back down the way people maybe do in the private business world." Trump's rhetoric makes it more difficult for China's leaders to crack down on counterfeiting or other intellectual property violations, Griswold said. "Because it looks like they’re backing down to foreign pressure. They don’t want to be humiliated in front of their citizens."

Chinese Foreign Ministry spokesman Lu Kang told reporters, "The Commerce Ministry of China has made it clear that we are fully prepared to deal with any new measures the US may take, and we have in place detailed countermeasures. We said before that, even though we will not be the ones to stir up trouble, we will never allow trouble to be brought to our doorstep. We will resolutely fight back. And we Chinese people always deliver what we promise."

Kennedy said Chinese President Xi Jinping will be giving a speech on Tuesday on economic reform, and he expects it won't be substantive enough to change the likelihood of a trade war between the two countries. "It may be not enough to woo the Trump administration, but it may be enough to get Japan, Germany, South Korea and others hopeful enough that they won’t side with the U.S. It’s possible that China is aiming to split the U.S. further from its allies."

Kudlow said in an interview on Bloomberg television on April 6 that "this is a moderate, tempered approach that we are taking. This is not a trade war. All we’re trying to do is save and defend American technology, which is crucial to American economic growth." While there are no ongoing negotiations between the two sides and there is no timetable for starting them, Kudlow said Trump and USTR Robert Lighthizer are considering sending a list to China on how the country can resolve a number of concerns.

House Ways and Means Committee Chairman Kevin Brady, R-Texas, also suggested Trump was being strategic. "President Trump is determined to confront China’s unfair trade practices," he said in an April 6 news release. "The deliberation period announced by the President gives the U.S. and China a long overdue opportunity to resolve this serious trade dispute."

Sen. Ben Sasse, R-Neb., was blunt in his criticism of the surprise tariff announcement. "Hopefully the President is just blowing off steam again but, if he's even half-serious, this is nuts. China is guilty of many things, but the President has no actual plan to win right now. He’s threatening to light American agriculture on fire. Let’s absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us. This is the dumbest possible way to do this."

But even as more prominent Republicans express their displeasure -- Senate Finance Committee Chairman Orrin Hatch's twitter feed had a picture of him holding up a T-shirt created by the Cato Institute that blasts tariffs -- there is no push in Congress to curtail the president's authority to change tariff rates. "I’m sad to say the chance of Congress getting involved is pretty slim," Griswold said.