Should-Read: Martin Feldstein: The Real Reason for Trump’s Steel and Aluminum Tariffs
Should-Read: This makes no sense at all. There is nothing in the formal or informal record suggesting that any of the potential deciders and influencers inside the Trump Administration support the steel and aluminum tariffs as some kind of Xanatos Gambit to persuade China to adopt intellectual property rules more to the liking of U.S. firms doing business in China. Absolutely nothing: Martin Feldstein: The Real Reason for Trump’s Steel and Aluminum Tariffs: “The US tariffs will… increase the likelihood that China will accelerate the reduction in subsidized excess capacity…
…It will be possible to exempt imports from military allies in NATO, as well as Japan and South Korea, focusing the tariffs on China…. The administration has not yet said that it will focus the tariffs in this way….
For the US, the most important trade issue with China concerns technology transfers, not Chinese exports… The Chinese government was using the Peoples Liberation Army’s (PLA) sophisticated cyber skills to infiltrate American companies and steal technology…. President Barack Obama and President Xi Jinping met in California in June 2013…. Xi then agreed that the Chinese government would no longer use the PLA or other government agencies to steal US technology…. It appears that such cyber theft has been reduced dramatically….
Current technology theft takes a different form. American firms that want to do business in China are often required to transfer their technology to Chinese firms as a condition of market entry. These firms “voluntarily” transfer production knowhow because they want access to a market…. The US cannot use traditional remedies for trade disputes or World Trade Organization procedures to stop China’s behavior…. US negotiators will use the threat of imposing the tariffs on Chinese producers as a way to persuade China’s government to abandon the policy of “voluntary” technology transfers…. [Then] the threat of tariffs will have been a very successful tool of trade policy.