US President Donald Trump has signed a memorandum on what he said could be about $US60 billion in tariffs on Chinese goods, in payback for "tremendous intellectual property theft" and "unfair" trade practices.
Photo: AFP PHOTO / Mandel NGAN
There will be a consultation period of 60 days before the tariffs begin, giving industry lobbyists and legislators a chance to water down a proposed target list which runs to 1300 products.
The White House said an investigation of Chinese policies ordered by Mr Trump in August under section 301 of the trade act, which gives the government the power to unilaterally impose sanctions, found a range of "unfair" practices.
Those included evidence China was using restrictions on foreign ownership that pressure companies into transferring technology, imposes unfair terms on US companies, steers investments in the US to strategic industries and conducts and supports cyber attacks.
However, the move risks retaliation by Beijing and a damaging trade war between the world's two largest economies.
The White House said the actions came after years of failed talks about the issue. Mr Trump has repeatedly criticised China as hurting the US economy.
"It is the largest deficit of any country in the history of our world. It's out of control," Mr Trump said before signing the memorandum.
"We have a tremendous intellectual property theft situation going on, which likewise is hundreds of billions of dollars."
Mr Trump said he had talked to China's President Xi Jingping about the problem, but the situation was not fair at the moment and he had to do something.
"That's really just a fraction of what we're talking about. I've been speaking with the highest Chinese representatives including the president and I've asked them to reduce the trade deficit by $100 billion.
"It's a lot. So that would be anywhere from 25 percent depending on the way you figure to maybe something even more than that.
"The word I want to use is reciprocal. When they charge 25 percent for a car to go in, and we charge 2 percent for their car to come into the United States, that's not good.
"That's how China rebuilt."
Threat of trade war: Retaliation from China
China said it was ready to retaliate with necessary measures.
"China will not sit idly by and let its legitimate rights and interests be harmed, and will certainly take all necessary measures to resolutely defend its legitimate rights and interests," the country's government said in a statement.
According to the Wall Street Journal, it is preparing to hit back with tariffs aimed at Mr Trump's support base, which would include levies targeting US agricultural exports from Farm Belt states.
Some politicians and sectors, including retail and agriculture, expressed concerns.
"I'm all for targeting Chinese intellectual property violations, holding them accountable - but let's be targeted in what we want China to change," Erik Paulsen, a Republican who represents Minnesota, said on Wednesday.
"Let's not shoot ourselves in the foot."
The US's top trade negotiator Robert Lighthizer acknowledged the possibility of retaliation, noting that agriculture was especially vulnerable. But he said that should not stop the US from responding.
"I don't think it is a sufficient worry that therefore we're not going to stand up for intellectual property but we're trying to do everything in a measured and appropriate way," he said at a congressional hearing on Wednesday.
"If there is retaliation, then the United States is going to have to take action to stick up for our farmers."
The US Congress is also weighing legislation that would boost the government's power to review foreign business deals, citing the threat posed by state-backed acquisition of US firms.
Meanwhile on Wednesday, the World Trade Organization (WTO) ruled the US had not fully complied with a 2014 ruling against its anti-subsidy tariffs on various Chinese products.
These ranged from solar panels and wind towers to steel cylinders and aluminium extrusions.
China's commerce ministry said the WTO ruling "proves that the US side has violated WTO rules" and "repeatedly abused trade remedy measures".
"[This] has seriously damaged the fair and just nature of the international trade environment, and weakened the stability of the multilateral trading system."
But the WTO has ruled against China's trade practices in the past. In January, it ruled that China must lower its tariffs on broiler chickens imported from the US.
Mr Trump said the WTO ruling had been a disaster for the US, saying the arbitration had been "very unfair".
Trump's moves to shut down free trade
In March, Mr Trump signed controversial orders imposing heavy tariffs on steel and aluminium - but a US officials said Australia, the European Union, Canada, Mexico, Argentina, Brazil and South Korea would initially be exempt.
In January Mr Trump also imposed taxes on imported washing machines and solar panels, sparking anger in China and South Korea.
He has pulled the US out of the 12-nation Trans-Pacific Partnership, calling it a "disaster ... pushed by special interests".
He is also renegotiating the North American Free Trade Agreement (Nafta) with Canada and Mexico, which he blames for a decline in manufacturing jobs in the US.
Mr Trump has long said the US is treated unfairly by its trade partners, and claimed the US had a trade deficit of $US800bn in 2017. Experts suggest the true figure is $566bn.
China has previously said there would be no winner from any trade war. It has also urged both sides to remain calm and hinted at making reforms "beyond expectations" to satisfy the US.
Mr Trump has previously tweeted "trade wars are good, and easy to win," but US Treasury Secretary Steven Mnuchin recently said the president "was not trying to start a trade war".
In a possible sign of what is to come, Best Buy, the largest US consumer electronics retailer, has decided to stop buying smartphones from Chinese telecom equipment maker Huawei, according to Reuters.
This would follow similar action from telecoms firms AT&T and Verizon, which cut ties with Huawei after US officials raised concerns about its close affiliation with the Chinese government.
Best Buy has declined to comment on the claims.
- BBC / Reuters