How the United States Should Confront China Without Threatening the Global Trading System



Robert Z. Lawrence | Peterson Institute for International Economics

President Donald Trump has been escalating the administration’s economic confrontations with China, the European Union, and other trading partners over most of the last year. Each battle has employed a particular legal rationale, including the invocation of national security, and claims about burdening US commerce to impose—or threaten to impose—tariffs and/or quotas on imports. Many of these steps have been notable for violating rules and regulations embodied by previous agreements with trading partners or by those enforced by the World Trade Organization (WTO). President Trump’s actions and threats have nearly always provoked trading partners to retaliate and warn of further actions, posing a major risk to worldwide flows of goods, services, and investments.

This Policy Brief argues that the Trump administration’s willingness to violate trade rules to maximize its ne- gotiating leverage is undermining its most important and most legitimate objective in international trade and invest- ment: persuading China to reform its problematic economic system, in which foreign firms are discriminated against in high-tech projects. This discrimination by China is aimed at fostering its industrial development. Foreign firms have cited multiple instances of Chinese pressures to transfer technology in exchange for market access…

To read the full report on the Peterson Institute website, click here.

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