U.S. plans next trade skirmish with China

Business & Technology

On January 22, the Trump administration slapped substantial tariffs on imported solar panels and washing machines, with China as the primary target. Likely in retaliation — though this was not made explicit — on February 5, China began investigating American exports of sorghum, a grain that is a primary ingredient for the popular Chinese liquor baijiu.

Neither move is large enough to be properly called the start of a “trade war,” but they are likely the first of several moderate actions that the two countries will take to address what both sides see as unfair bilateral trade practices.

Here’s how American businesses and politicians are deliberating the next steps in the skirmish:

  • Two Republican senators want to blacklist Huawei from government contracts, further isolating the smartphone and network equipment maker that already saw a deal with AT&T fall apart a month ago under political pressure, Reuters reports.
  • “Huawei is effectively an arm of the Chinese government,” Tom Cotton of Arkansas argued. The legislation he introduced together with Marco Rubio of Florida proposed blocking both Huawei and its competitor ZTE from selling or leasing equipment to the U.S. government.
  • Other legislation is being softened, however, as industry lobbyists work to prevent commercial sales of too broad a definition from becoming ensnared in Committee on Foreign Investment in the United States (CFIUS) review, according to Reuters.
  • Big U.S. companies worry about loss of sales if the legislation to expand CFIUS, led by John Cornyn in the Senate and Robert Pittenger in the House, does not clearly define which technologies need to be reviewed, or expands the caseload to the point that the CFIUS review is prohibitively slow.
  • Meanwhile, the American aluminum foil industry awaits a final verdict from the U.S. International Trade Commission, as industry players argue that Chinese imports have decimated their business, Bloomberg says. If the commission rules in their favor, import duties on Chinese aluminum foil of up to 162 percent could become permanent.