Trump China tariff policy ill-suited to supply chain problems, US panel told

US President Donald Trump’s tariff policy is proving ill-suited, and even counterproductive, for the US supply chain in dealing with China’s expanding global manufacturing dominance, witnesses said in a government hearing in Washington Thursday.

Testifying before the US-China Economic and Security Review Commission, which monitors national security implications of bilateral trade and economic relations, they called for an increase in comprehensive and structural responses, including rebuilding US industrial capacity in such sectors as defense and chips, and working to ensure China is not part of crucial supply chains.

Emerging markets economist Adam Wolfe of Absolute Strategy Research said Beijing’s efforts to strengthen high-tech and other manufacturing capacity with state incentives and subsidies have become long-term policy and that US trade sanctions and restrictions are accelerating it.

“One of the main motivations for China adopting this … development model of targeting a relatively stable manufacturing share of GDP [gross domestic product] was US sanctions and US tariffs on China, and fear of their own choke points being exploited by the US,” he said.

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“So Xi Jinping has made that a priority to say that China will never be beholden to US choke-point technologies, which means that they need to make everything basically domestically,” he added, referring to the Chinese leader.

South China Morning Post