In the tit-for-tat global trade environment President Donald Trump has manufactured, China urged the U.S. to make a "wise decision" as it approached a deadline deciding billions of dollars in threatened American tariffs on hundreds of Chinese goods.
While there are dozens of categories trade negotiators can quibble over, the big items the Chinese may target are agriculture _ pork and soybeans. The significant Chinese goods targeted by American taxes are technology items like semiconductors, robots and computer monitors.
For months, the Trump Administration has been talking tough with China. It's important to note that, despite all the heated rhetoric and threats, what the trade hawks want isn't to raise prices on Chinese goods to help "even the playing field" for American companies. It's far fetched to expect U.S. companies will invest at scale in the manufacturing sectors to compete with Chinese factories.
Instead, this about the marketplace of ideas. For years, even as American companies rushed into China, attracted by its enormous consumer potential, they have complained that the price of access costs them intellectual property. It's something not captured in the trade deficit data.
Before the steel tariffs, before the list of 1,300 Chinese items targeted for American tariffs, the U.S. Trade Representative launched an investigation into China's treatment of "technology transfer, intellectual property, trade secrets and innovation." That probe is what led to the proposed U.S. tariffs _ the same tariffs about which China now cautions the administration to make a "wise choice."
In the week ahead, investors await for China's counterpunch. The good news is that the two trading partners are still talking. Unfortunately, even if neither side is really listening, the global market is.
