China inflicts political and economic pain upon US: Report

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China inflicts political and economic pain upon US: Report

WASHINGTON - The Chinese government designed its first concrete response to President Donald Trump's recent wave of protectionist policies to inflict noticeable political and economic pain upon the United States within the global trade rules.

China imposed tarrifs on a relatively modest $3 billion in American imports. But by hitting numerous products, including fruit, wine, ginseng and pork, that affect congressional districts across the country, China demonstrated that it can exert pressure within the American system.

The goal was to demonstrate resolve without escalation and to encourage disadvantaged farmers and workers to complain to their elected representatives. Beijing is prepared to engage in a slugging match, but its preferred solution to the deepening trade dispute remains a diplomatic outcome, analysts said.

"This is a negotiating tactic," said Jeff Moon, a former U.S. assistant trade representative for China. "They tried negotiating by hinting at concessions. This is hinting at the sharp end of the stick."

China also is being careful to act within the rules of the global trading system that were established under U.S. leadership over the past seven decades. As it broadens its global role, Beijing is eager to portray itself as a responsible actor in contrast to a rogue United States that is withdrawing from treaties and shunning multilateral cooperation.

China's measured response thus far is meant to show that "they stand on the moral high ground here," said Claire Reade, a former U.S. trade negotiator now with Arnold & Porter.

Chinese officials previewed their $3 billion action in public comments March 23, one day after Trump announced tarrifs on up to $60 billion in imported Chinese products, including aerospace, information technology and machinery.

But Chinese officials billed their tariffs as a response to Trump's earlier import levies on steel and aluminum. Like the European Union, which also objected to Trump's metals tariffs, the Chinese rejected the president's claim that his actions on steel and aluminum were justified by national security considerations.

Instead, China and the EU said the United States had acted on economic grounds, seeking to protect its industries from an unwelcome flood of imported products. In that event, under the rules of the World Trade Organization, China was authorized to retaliate.