Thursday, May 19, 2022

By Lifting Tariffs, the U.S. is Rewarding the Chinese Communist Party for its Bad Behavior

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The FBI just called spying by China’s government “the biggest threat we face as a country.” Meanwhile, the U.S. is working to make it easier for China to export goods here. It’s a choice!

There’s been a lot going on in the world, so you may have missed that FBI Director Christopher Wray recently gave an interview with 60 Minutes in which he talked about threats to U.S. security, including potential cyberattacks from Russia.

Wray was pretty blunt in what he assessed to be the top threat to the United States, and it wasn’t Russia. Here he is:

The biggest threat we face as a country from a counter-intelligence perspective is from the People’s Republic of China, and especially the Chinese Communist Party. They are targeting our innovation, our trade secrets, our intellectual property on a scale that’s unprecedented in history. They have a bigger hacking program than that of every other major nation combined. They have stolen more of Americans’ personal and corporate data than every nation combined. It affects everything from agriculture to aviation to high tech to healthcare, pretty much every sector of our economy. Anything that makes an industry tick, they target.

O.K., so here we have the FBI chief, on record, telling the nation’s premier news program that the Chinese Communist Party (CCP) is actively working to target pretty much every segment of the American economy and weaken the United States. It’s alarming.

Meanwhile, we know that this isn’t the only bad thing the CCP is doing. China’s government is overseeing a genocide of the Uyghur people, with at least 1 million people taken from their homes and involuntarily put into concentration camps, where many of them have been physically abused and even tortured. Many are now being forced to make goods for Western brands.

On the trade front, Chinese officials continue to deploy a litany of predatory practices to dominate global markets, from state-owned enterprises to massive government subsidies to lax labor and environmental laws to intellectual property theft. Oh, and that last one — China’s government pledged to stop stealing IP as part of the “Phase 1” trade deal signed in 2020, and it turns out it’s continuing to steal IP!

You’d think all of this would be a wake-up call to the Biden administration and Members of Congress. China’s authoritarian regime is a strategic adversary, and it requires a strong, robust response from the United States. And when it comes to rhetoric, both parties have been eager to call out China.

But in practice, the United States is actively working to do the CCP’s bidding by making it easier for China to export goods to the United States, which almost certainly will undermine other U.S. efforts to counter China.

Really sums things up.

The Office of the U.S. Trade Representative (USTR) announced this week that tariffs on Chinese goods issued by the Trump administration will expire after four years, and American companies that want them to continue will have to file for an extension. After that, they’ll be a review process to determine whether the tariffs should be extended. Most of the tariffs are set to expire in July and August 2022, so this is all happening pretty quickly.

There’s been tremendous pressure from importers and Wall Street elites to lift these tariffs, who enjoyed two decades of importing cheap stuff — often made by people working for low wages under terrible conditions, all at the expense of American workers, 3.7 million of whom lost their jobs. Never mind, of course, that imports continue to rise — clearly the tariffs aren’t harming the bottom line that much.

Still, importers want to go back to pre-2018, and it appears that all that pressure has gotten to the Biden administration, which thus far has resisted calls to lift tariffs, pointing out the fact that China’s government has done nothing to deserve having them lifted (see the list of bad behavior above).

But that’s not all, folks!

Meanwhile on Capitol Hill, Members of Congress are meeting to finally pass a big industrial policy bill. As my colleague Matt McMullan wrote on Tuesday, it’s a huge part of the U.S. response to China, and Chinese officials in Washington, D.C., are actively lobbying to weaken it. President Biden even noted this in a speech, saying that the bill’s passage is a matter of national security and “why the Chinese Communist Party is lobbying folks to oppose this bill.”

And again, there are those in Congress who want to do the CCP’s work them. There’s a provision in the Senate version of the legislation that would order USTR to reinstate all exclusions on the tariffs issued in 2018. This is a bad idea, as it would hand China additional leverage and make it harder for USTR to do its job.

Here’s the tl;dr on this: There’s widespread agreement that the CCP poses a huge threat to the United States, and legislation like the industrial policy bill aims to strengthen U.S. capabilities to address that threat. But by weakening trade enforcement measures like tariffs, the U.S. is undermining its own hard work and rewarding the CCP for bad behavior.

This is fine.

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