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Trump plans to make China very angry at the worst possible time
http://www.businessinsider.com/trump-trade-plans-for-china-threaten-north-korea-talks-2017-8 On Monday President Trump is expected to to sign a memo that will initiate an investigation into intellectual property violations of American companies coming from China.
There is a wrong way and a right way to do this, and Trump plans on doing it the wrong way — by dredging up an outdated trade measure from 1974.
It is a measure that will anger China's leadership at a delicate time, a time when the US is trying to cool tensions with North Korea. China is the isolated nation's most powerful ally and economic benefactor.
De-escalating tensions with North Korea while ratcheting them up with China probably won't work.
The law Trump plans to use is Section 301 of the US Trade Act of 1974. Basically it allows him to put a tariff on another country without Congressional approval.
"The law hasn't been used in 50 years and there's a good reason for that," economist Chad Brown of the Peterson Institute for International Economics told Business Insider on a phone call. "We built a brand new trading system so we didn't have to use this law."
That trading system is called the World Trade Organization — the body formed in 1995 which handles trade disputes between member nations. Nationalist, protectionist elements of Trump's cabinet — like National Trade Council head Peter Navarro and adviser Steve Bannon — have shown disdain for the body. To them, it's a symbol of globalization, and China's entrance into it in the 1990s led to the decline of American manufacturing.
-snip-
There is a wrong way and a right way to do this, and Trump plans on doing it the wrong way — by dredging up an outdated trade measure from 1974.
It is a measure that will anger China's leadership at a delicate time, a time when the US is trying to cool tensions with North Korea. China is the isolated nation's most powerful ally and economic benefactor.
De-escalating tensions with North Korea while ratcheting them up with China probably won't work.
The law Trump plans to use is Section 301 of the US Trade Act of 1974. Basically it allows him to put a tariff on another country without Congressional approval.
"The law hasn't been used in 50 years and there's a good reason for that," economist Chad Brown of the Peterson Institute for International Economics told Business Insider on a phone call. "We built a brand new trading system so we didn't have to use this law."
That trading system is called the World Trade Organization — the body formed in 1995 which handles trade disputes between member nations. Nationalist, protectionist elements of Trump's cabinet — like National Trade Council head Peter Navarro and adviser Steve Bannon — have shown disdain for the body. To them, it's a symbol of globalization, and China's entrance into it in the 1990s led to the decline of American manufacturing.
-snip-
