Trump’s Schizophrenic China Trade Policy Is a Menace to the Global Economy

Reversing course yet again, this morning President Trump declared that he will indeed impose 25 percent tariffs on $50 billion of imports from China. He also announced plans to publish new restrictions on investments by Chinese persons and entities, which will take effect, presumably, in early July. The president seems to thrive on the uncertainty and chaos that his version of leadership churns out on a daily basis, but whether any of this actually happens is anyone’s guess.

The administration is right to be concerned about China’s mercantilist technology policies, but it seems to have no clue about how to mitigate the problem. Tariffs will do nothing to address China’s promotion of national champion industries, nor will it dissuade intellectual property theft of forced technology transfer policies. They will disrupt global supply chains and make Americans, Chinese, and many others around the world less well off than they are today.

For over a decade, Washington and Beijing have been waging a tit-for-tat technology trade war, which has come into clearer focus during the Trump administration. There are far better options than tariff wars to make competition in the technology space more market-oriented and mutually beneficial, including by negotiating a bilateral free trade agreement.