DW-China Trade Update (31st Edition)
The U.S. renews threat of tariffs against China in response to COVID-19 pandemic
As the United States continues to combat COVID-19, the U.S. has turned a page in its playbook from solving the problem to finding fault with adversaries, both internal and external. In a few swift announcements last week, what started a few weeks ago as saber-rattling when the State Department Secretary placed blame for the pandemic on China, is now promising to move the U.S. further into isolationism and threaten the unfulfilled peace between China and the U.S. These unfortunate developments portend new protectionist policies from the Administration that are already shaking the markets. It further suggests that over the next several months, as election fervor returns and the President seeks cover from the economic fallout of the pandemic, the U.S. President will be more intent on finding fault and punishing China than restoring the early seeds of success in the Phase I US – China Trade Agreement.
Last Thursday, the U.S. announced that the Administration was considering retaliatory measures against China as punishment for the coronavirus outbreak. Notably, the government called to impose new tariffs on Chinese imports and said that the trade deal with China was now "of secondary importance" to the COVID-19 pandemic. Currently, $370 billion worth of Chinese goods remain subject to as much as 25% additional tariffs on imported goods, which were justified by the Administration as necessary to change China’s own trade policies. With this new undefined threat, there may not be much left in the cupboard to cajole Beijing but perhaps just enough to build the President’s record on China in anticipation on the November elections. Nonetheless, on Sunday, the U.S. President told reporters, “tariffs at a minimum are the greatest negotiating tool that we have ever devised and we never used for negotiations,” and “it’s the ultimate punishment.” He however did not stop with China, and turned his anger towards the World Health Organization and many other countries, including Canada.
上周四，特朗普总统宣布，他的政府正在考虑对中国采取报复措施，作为对新冠疫情爆发的惩罚。其中值得注意的是，特朗普呼吁对中国进口商品征收新关税，并表示较目前新冠疫情相比，与中国签订的的贸易协定现在已是“次要的”。目前，价值3700亿美元的中国商品仍需缴纳最高25％的额外关税，且美国政府认为这是改变中国贸易政策所必需采取的行动。特朗普尚未明确的新关税的威胁，可能橱柜里已经没有多少可以用来说服北京方面的东西了，但这或许足以让总统在11月大选之前建立起其对中国强硬政策的记录。在周日，特朗普告诉记者: "最低关税是我们设计的最伟大的谈判工具，我们从未在谈判中使用过" 而且"是最终的惩罚。" 然而，特朗普并没有止步于中国，他把愤怒转向了世界卫生组织和包括加拿大在内的许多其他国家。
Following those statements, the U.S. Markets responded quickly with a level of new anxiety, only worsening what has been a dismal first two quarters. Voices from various industries opposing the imposition of new tariffs also came out after the news.
On Friday, the U.S. President declared a national emergency over potential foreign threats to the nation’s electricity grid, thereby paving the way for the government to block imports of certain equipment necessary to supporting the U.S.’s demands. Again, this move suggests that the Administration intends to de-couple from China in areas that it feels threaten the U.S.’s national security interest, a common retort throughout this term. Over the weekend, the Administration’s deputies took to supporting these actions, and promising that economic measures were in the works to unravel the U.S.’s reliance on China’s supply chain. All of these moves will leave U.S. companies that are invested in China in turbulent waters as Beijing will certainly retaliate, just as it did when the Administration rolled out the Section 301 tariffs.
As we have seen over the last 2 years, this remains a fluid situation. We will continue to monitor the latest moves from the Administration and its impact on US-China trade relations.
Dickinson Wright Law Firm
About Mark: Mark Heusel is an experienced commercial business attorney and serves as the Chair of the Firm’s China Practice Group. He has more than 25 years of experience in representing multi-national companies in the manufacturing, retail and automotive industries. Mr. Heusel’s experience includes advising foreign companies in the areas of foreign direct investment in the United States, business formation, Greenfield investment, international trade, commercial transactional matters, and dispute resolution. In his role as International Practice Group Chair, he serves as general counsel to companies throughout Asia and Europe, directing the firm’s resources to better assist his clients.
Mr. Heusel began his legal career by representing clients in a variety of litigation matters in state and federal courts and in various domestic and international arbitral forums. With more than 20 years of litigation experience, particularly in the areas of contract disputes, supply chain litigation, employment matters (including discrimination and wrongful discharge litigation), commission disputes, personal injury, and real estate and land use litigation, he gained invaluable first-chair experience in understanding and recognizing how a company’s success may be impacted by business disputes. Leveraging this experience, Mr. Heusel focused his career on assisting foreign companies entering the North American market. His interests and passion for helping companies in a proactive manner led to his current position as International Practice Group Chair, where he now has the opportunity to advise and counsel clients entering or expanding their businesses in North America.