The Trump administration is set to unveil a package of punishing measures just after high-noon today all aimed at China, including billions in new import tariffs (or better put - consumer taxes).
The White House is seeking to clamp down on what it says are improper Chinese trade practices and lax intellectual property rights by making it significantly more difficult for China’s companies to acquire advanced American technology or invest in American companies.
Few disagree on both sides of the Pacific that Beijing needs to do more to open its markets to foreign competition, improve intellectual property protection, and provide a level playing field for all businesses operating in the Middle Kingdom.
The disagreement is in how this all happens.
It is still unclear how a strategy of using tariffs will move the needle.
Not only will the American consumer feel the burden with fewer funds to spend, but companies operating with long-term vision also now need to create a new playbook,
MBA 101 tip, for companies to be successful, they need predictability and want to see problems fixed productively without friction.
Think solutions, not sanctions.
For me, it’s just not clear how tariffs get you to fix these problems.
Listed on the official White House schedule as "THE PRESIDENT signs a Presidential Memorandum targeting China’s economic aggression," this memo will change global business in ways unknown but known is in the fact that power of multinational corporations has peaked and the future American elections will never be the same.
Even with just hours to go, final details of Trump's plan, including the number of imports to be hit by tariffs, remain in flux and full of Twittersphere speculation.
Since Trump will just be singing a memo today, the tariffs won’t be imposed immediately, giving American business, lobbyists, and special interests an opportunity to comment and suggest which products should be subject to the duties. James Madison's faction theory will be in full effect in the nation's capital.
Trump’s metals tariffs are already taxing patience. The LAT reports, the Trump administration’s tariffs on imported steel and aluminum are set to take effect Friday, but the rollout is being criticized as confusing, rushed, and potentially crisis-inducing. Have fun dropping off products at the Port of Los Angeles next week, next month, next year.
Whatever the final details become, this issue will linger for years.
Not only do companies now face a two-sided problem of needing to engage both Beijing and DC in respected fashions, but it is hard to see how this action doesn't shape the 2018 and 2020 elections - being tough on China makes American voters feel good.
Also, be mindful that as the CW inside the beltway is all focused on US-China commercial relations, Brussels has a say as well.
As Trump makes "Ameican First" moves, the Europen Union is holding firm in the background. This memo will undoubtedly strengthen the EU. As the biggest trading block in the world, they can flex their power and be more selective, stable, and secure - all attributes global business likes.
Enjoy the ride.
Marc A. Ross is the founder of Caracal Global and specializes in global communications and thought leader management at the intersection of politics, policy, and profits. Working with boardrooms and C-Suite executives from multinational corporations, trade associations, and disruptive startups, Marc helps leaders create compelling communications, focused content, and winning commerce.
