The visit of the U.S. President Donald Trump to China was meant to strengthen bilateral ties. However, the recent decisions tell a different story as Chinese companies face many roadblocks in the U.S. The trade restrictions on Chinese firms in the country may impact bilateral ties in near future. Many U.S. auto companies have established their manufacturing plants in China. They have collaborated with local players to avail benefits of Chinese regulations. However, they may face backlash if the Trump administration presents more roadblocks for Chinese firms in the U.S. The administration has been considering a curb on Chinese investments and imposing tariff on various imports from China for alleged theft of intellectual property, according to the recent report from Bloomberg.
The investigation of the U.S. Trade Representative’s office about China’s IP practices has been concluded. The announcement about trade restrictions would be made in coming weeks. Tensions across the world have grown after the announcement of tariffs imposed on steel and aluminum. The decision has also resulted in resignation of Trump’s Chief Economic Adviser Gary Cohen, who was against such measures. Following the resignation, the value of dollar fell, and the value of yen increased 0.6 percent. Liu He, top Economic Adviser of Chinese President Xi Jinping met Cohn last week. He told delegates that both countries want to avoid trade wars.
The U.S. President has been struggling with trade offensives on multiple fronts due to imposing tariffs on Chinese imports and infuriating countries such as Canada and European Union with threats to impose more barriers. There is a possibility of all-out trade war as his counterparts threatened retaliation. According to the people familiar to the matter, the U.S. could apply tariffs on various products such as shoes, consumer electronics, and clothing under the most extreme scenario.
There is a possibility that the tariffs will be combined with restrictions on Chinese investments in the country. The Trump administration have been considering new measures beside security measures. Moreover, it has been planning to enforce reciprocity with China on foreign investments. This implies that the U.S. would allow Chinese companies to takeover only if the U.S. companies have access in China. However, the officials have been weighing in options.
The White House spokesperson has not commented on the ongoing process, stating that no final decision has been made. On the other hand, China’s Ministry of Commerce refused to comment on the matter. The U.S. Treasury Secretary Steven Mnuchin outlined that the objective of Trump administration is to achieve “fair and balanced” trade ties with China.
The U.S. firms have recommended the administration to discuss issues with Chinese officials before coming to conclusion of imposing any penalties, according to industry lobbyists. Vice Foreign Minister Zhang Yesui said that Chinese officials will host dialogue on trade issues with U.S. officials this week. The decisions that would declare wars on all trade fronts will not be beneficial for both countries. The conclusions should be drawn after the meeting.