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Beijing's role in Korea may shape US tariffs decision

Nuclear diplomacy with North Korea and domestic politics in the U.S. agricultural heartland could determine the targets and timing of the Trump administration's efforts to change China's trade policies, analysts and economists say.

The White House faces a self-imposed deadline to release a list of Chinese imports containing "industrially significant technology" that would be subject to stiff tariffs. The move is part of efforts to push back against what officials say are discriminatory and burdensome trade practices.

The administration needs to strike a balance between following through on calls for tariffs while not alienating Beijing given President Donald Trump's goal of denuclearizing the Korean peninsula, said Simon Lester, the associate director of the Herbert A. Stiefel Center for Trade Policy Studies at the libertarian Cato Institute.

While White House rhetoric suggests the administration will impose tariffs, "China's role in the North Korea summit and keeping that kind of dialogue going is important," Lester said.

"That's the kind of thing that could cause the Trump administration to hold off a bit on imposing the tariffs."

Steel and stoppers

The White House said in a statement last month that it was continuing plans to impose a 25% tariff on $50 billion of Chinese imports, including those related to the "Made in China 2025" program, with a final list set to be released by June 15 and tariffs going into effect "shortly thereafter."

In April, the Trump administration prepared a list of more than 1,300 goods that could be subject to tariffs. It included a wide range of products, from vaccines for human and veterinary medicine to varieties of alloy and stainless steel to rubber caps and stoppers.

While the administration appears determined to impose the tariffs it initially outlined, some companies and lawmakers on Capitol Hill are seeking exemptions, said Todd Tucker, a fellow at the left-leaning Roosevelt Institute.

"You had the U.S. importers of consumer electronics pushing for exemptions, although this seems unlikely to be granted, as these constitute a third of the $50 billion in trade targeted," Tucker wrote in an email. "Then you have agricultural export interests, who would rather not have any tariffs at all, since they're selling to China and fear retaliation."

Tucker added that it would be easier for the White House to go forward with the list it already prepared rather than exempting certain items. He noted, though, that the U.S. Department of Commerce did create a system of exemptions for steel and aluminum tariffs when the administration initially announced them.

Even if the administration follows through on the course it has outlined, trade experts have questioned whether China would significantly alter is economic model to meet U.S. demands on protecting technology, the impetus for implementing the tariffs. But that does not necessarily mean that the U.S. cannot get anything from Beijing.

An attractive offer?

China has reportedly offered to purchase nearly $70 billion of agricultural products, provided the U.S. abandons threatened tariffs. And domestic political exigencies may cause the Trump administration to pause the implementation, said Gary Hufbauer, a senior resident at the Peterson Institute for International Economics.

"That's got to be very attractive for Trump going into the November election," Hufbauer said.

The current trade rifts between the United States and G-7 allies, EU member nations and North American Free Trade Agreement partners may also factor into Trump's thinking about starting another trade conflict, he added.

"My expectation at this juncture is we will not see the imposition of tariffs on China," Hufbauer said. "[President Trump has] enough trade battles going with Europe, and the NAFTA negotiations and ... G-7 summit and all that. That would be an additional reason not to open a new front against China, beyond publishing the list."