In a statement, Trump said "China has repeatedly engaged in practices to unfairly obtain America’s intellectual property," and "Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers." Trump said he had asked Agriculture Secretary Sonny Perdue, "with the support of other members of my Cabinet, to use his broad authority to implement a plan to protect our farmers and agricultural interests." He offered no details. In a statement this morning, the White House said the trade moves "are a response to years of unfair trade practices by China."
"In response to the possible new U.S. tariffs, China’s Commerce Ministry said Beijing would respond with its own countermeasures should it come to that," reports Bob Davis of The Wall Street Journal. The Journal's Washington Bureau chief, Gerald Seib, writes that Trump's announcement "was almost certain to cause fears of a full-scale trade war among investors, farmers and businesses with ties to Chinese trade." The news came after the close of stock trading, but recent trade tensions with Beijing have already fueled wide price swings in recent trading sessions." Stock and agricultural commodity markets are down this morning, and falling.
"Why would President Trump threaten steep tariffs on Chinese imports, rattling stock markets?" asks the Journal's Greg Ip. "It’s partly because this is a negotiation, and a negotiator must show a tolerance for pain if his demands aren’t met. For Mr. Trump to succeed, China must believe its pain will exceed that of the U.S. in a trade war and settle on his terms. Whether he’s right depends heavily on who has the most leverage. Economically, it's the U.S.," because Chinese exports to the U.S. are 4 percent of its economy, while those from the U.S. to China are only 0.7 percent of our economy.
"China imports so much of the world’s soybean supply that it has few alternatives to the U.S.," Ip writes. "Brazil, the only other major supplier, is already reaching its capacity. That means China would have to keep importing American soybeans while its tariff rippled through to the price of tofu, bean curd, animal feed and thus chicken and pork," hurting Chinese consumers. "Perhaps the biggest risk to China from a trade war is that global manufacturers no longer regard it as a reliable base from which to supply the U.S. and shift operations elsewhere."
However, "The political leverage is with China," Ip writes. "Chinese leaders don’t have to worry about losing elections or critical editorials if its consumers pay more for soybeans. The communist leadership prioritizes growth, but prioritizes long-term geostrategic interests even more. . . . The U.S.’s political pain threshold is low, which other countries regularly exploit." The Associated Press reports, "Seven months before the 2018 midterm elections, Trump’s faceoff with China . . . has exposed an unexpected political vulnerability in what was supposed to be the Republican Party’s strongest region: rural America."