US President Donald Trump will sign an executive memo on
Monday ordering US Trade Representative Robert Lighthizer to determine
whether to investigate China's trade practices, triggering concerns that
Washington may take unilateral moves harming China-US trade and
economic ties.
The move comes amid rising tensions
over the Korean Peninsula as Washington and Pyongyang has threatened
possible military action against each other, and one week after China
voted to impose tougher economic sanctions on Pyongyang in the UN
Security Council.
The possible inquiry will be under Section 301 of the
Trade Act of 1974, which allows the US president to unilaterally impose
tariffs or other trade restrictions to protect US industries from
"unfair trade practices" of foreign countries. The provision has fallen
into disuse after the creation of the World Trade Organization.
Why does Trump make the order now?
It
has been two weeks since media first reported that Trump has been
mulling such an investigation under the 1974 Trade Act's Section 301.
It
was expected earlier this month but Trump made the announcement on
Saturday, postponing the decision of the probe on Monday, as the White
House pressed for China's efforts on Korean Peninsula.
Even if a decision is made to start such an
investigation, itcould take as long as a year to conclude, an
administration official said. He said it would be premature to speculate
on actions that could eventually be taken against China, and added that
the issue could be resolved through "negotiated agreement."
The
president has publicly linked the issue of trade fairness with his
calls on China to pressure DPRK to drop its weapons program.
"We
lose hundreds of billions of dollars a year on trade with China. They
know how I feel," he told reporters on Thursday. "If China helps us, I
feel a lot different toward trade."
But will trade tariff be a proper tactic?
"This
action would represent a sharp escalation of pressure on China on two
fronts – the China-US bilateral trade relationship, and China’s role in
managing the volatile situation on the Korean peninsula,” said Eswar
Prasad, a professor in the Dyson School at Cornell University, and a
senior fellow at the Brookings Institution.
Michael Froman, former USTR under the Obama
administration, warned that the US could face retaliation if the country
moves away from resolving trade disputes through the WTO and instead
starts taking unilateral actions.
"A decision to
trigger Section 301 today is problematic because it would provide
additional fuel to the already simmering argument that the Trump
administration is undoing the American commitment to rules-based trade
and decades of work to establish international cooperation," argued
Bown, who worked as a senior economist for international trade and
investment in the White House Council of Economic Advisers and the World
Bank.