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Editorial: U.S.’s high tariff policy poses too great a risk

  • May 15, 2019
  • , Nikkei , p. 2
  • JMH Translation

President Donald Trump’s high duty policy is gaining steam. With the government in the process of imposing high tariffs on almost all Chinese imports, he has also threatened to penalize the European Union (EU) and Mexico.

 

President Trump is also mulling imposing high tariffs on car imports from major trading partners and he is soon due to make a final decision on whether or not to carry this out. He must immediately put an end to this high tariff policy that has thrown the global economy and the financial market into chaos.

 

The U.S.-China trade war continues to intensify. To respond to the U.S. move to impose additional sanctions, China has announced that it will charge duties on imports worth 60 billion dollars on June 1 and raise them up to 25% from the current 5-10%.

 

The U.S. responded by presenting plans to impose a duty of up to 25% on additional imports worth 300 billion dollars and is making preparations to invoke these rates after the end of June. President Trump says he will meet with Chinese President Xi Jinping at the end of June, but the continuation of tit-for-tat retaliatory high tariffs may continue for some time.

 

There are huge problems with China. It rejects reviewing industrial policies that are deeply rooted in the one-party dictatorship under the Communist Party of China and state capitalism and has repeatedly engaged in intellectual property theft and forced technology transfer. It is reasonable that the U.S. demands China redress these practices.  

 

But America’s reckless imposition of high tariffs and driving China into a corner poses too great a risk. The approach may not only put an excessive strain on American and Chinese businesses and consumers and decelerate their economies but also may fundamentally upset the global economy and financial markets.

 

The U.S. high tariff policy does not target China alone. It imposes high tariffs on steel and aluminum imports from major trading partners on national security grounds. Now consideration is underway to adopt a similar duty on auto imports. Based on a research report submitted by the U.S. Department of Commerce, President Trump will make a final decision before May 18.

 

The view is spreading that President Trump may defer a decision, but it is foolhardy to consider this option to begin with. The approach of using the imposition of a high duty as a threat and forcing Japan and other trading partners to make concessions during negotiations is inexcusable  

 

The U.S. is threatening to impose additional tariffs on the EU and Mexico, with which it has disputes on aviation subsidies and illegal immigration, respectively. It must be stopped from pursuing a unilateral and unreasonable policy.

 

The Smoot-Hawley Tariff Act of 1930 not only compounded the Great Depression but also ended up triggering WWII. President Trump should heed the bitter lessons of these historical facts and resolve the trade dispute through dialogue instead of high tariffs.

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