Concerned with the "very serious" problem of losing intellectual property to China, President Donald Trump plans to make a decision on imposing tariffs on Chinese imports in the "very near future," U.S. Trade Representative Robert Lighthizer told House lawmakers at a hearing March 21.
Calling it an "enormously important issue," Lighthizer told members of the House Ways and Means Committee that China's issues with requiring the transfer of American intellectual property as a cost of doing business has been going on for a "very long time" and could be offset by tariffs on their imports.
Should Trump decide to move on Chinese tariffs, the Office of the U.S. Trade Representative will develop an "algorithm" to quantify the proper remedy that focuses on trade actions being explored by the administration, Lighthizer said at the hearing.
The algorithm would put the maximum amount of pressure on China and minimum amount on the U.S. consumer, with technology product imports being the focus, he said.
"A combination of the two would be the kinds of things to put tariffs on if we were to do so," Lighthizer said. "We have a very serious problem of losing our intellectual property, which is the single biggest advantage of the American economy."
Ways and Means Committee Chairman Kevin Brady, R-Texas, said that before the administration puts tariffs in place, a public comment period should be held to assess the potential economic impact. He warned against any tariffs that could damage U.S. industries.
"Oftentimes, indiscriminate tariffs are not the right approach," Brady said. "It's not about backing down, it's about hitting the target, which is China and its bad practices, not our allies or other U.S. sectors. [If] we hurt our allies, America will ultimately lose."
Rep. Erik Paulsen, R-Minn., said Minnesota-based Best Buy Co. Inc. is concerned about the potential price hike on consumer electronics.
"Let's be targeted in what we want China to change and let's go after that," Paulsen said. "Because consumer electronics don't have domestic production. And I hope we won't be seeing tariffs imposed on products that a lot of American families and consumers and small businesses purchase every day."
Major retailers have also penned letters to Trump citing potential disruptions in the supply chain and increased consumer prices as a result of any such tariffs.
Lighthizer's office, which launched a Section 301 investigation into Chinese trading practices in August 2017, has alleged that the Chinese government uses joint venture requirements and foreign equity limitations to secure American intellectual property for U.S. companies doing business in the Asian nation.
The Trump administration has made reducing the $375.2 billion trade deficit by $100 billion with China a priority, an objective that may well be reached by imposing heavy tariffs on imports on consumer electronics and other consumer products from the Asian nation.
The Washington Post reported that Trump is ready to impose tariffs of $60 billion on U.S. imports of consumer products from China by March 23.
Lighthizer touched on a bevy of trade topics at the hearing, including Trump's steel and aluminum tariffs, negotiations of the North American Free Trade Agreement and free trade agreement possibilities with other countries in what has become a crowded trade agenda for the Trump administration.
He said he hopes the exemption process for countries targeted by the 25% tariff on steel imports and 10% tariff on aluminum imports will be completed by the end of April, roughly a month after the tariffs go into effect March 23. Lighthizer said he is conducting talks with Argentina, Australia and the European Union and expects to begin talks soon with Brazil in the bid for tariff exemptions.
Commerce Secretary Wilbur Ross and European Commissioner for Trade Cecilia Malmstrom said in a joint statement March 21 that they have "immediately" begun discussions on trade concerns, including steel and aluminum "with a view to identifying mutually acceptable outcomes as rapidly as possible."
Lighthizer did not mention a specific time frame when pressed by the committee, but said the administration "will get out as we come to an agreement," adding that some countries will not be subject to the tariffs during the negotiation process, including Canada and Mexico, which were temporarily exempt from the tariffs as the three countries rework NAFTA. The next round is slated to be held in April in Washington.
The trade chief also said his office is considering the possibility of negotiating free trade agreements with countries in Africa as well as with Vietnam and the Philippines, the United Kingdom and Japan at the "appropriate time." Expanding the scope of new free trade agreements is now possible after the recent swearing in of two deputy trade representatives, he said.
Lighthizer said he is hopeful that the U.S. and South Korea, now in talks to rework the five-year-old United States-Korea Free Trade Agreement to reduce what Trump said is a growing trade deficit for the U.S., can come to an agreement to satisfy lawmakers. Steel exports from South Korea have become a concern, he added.