Rep. Bera Says More Tariffs on China Can Counter Economic Coercion
Center for a New American Security Senior Fellow Emily Kilcrease asked Rep. Ami Bera, D-Calif., co-sponsor of a bill asking the Biden administration to come up with a strategy to counter China's economic coercion, (see 2110180036), how he'd like to see the U.S. respond to economic coercion from China. Should we hike tariffs? Offer direct assistance to affected companies? Make a statement?
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Bera, who was speaking at a CNAS program on coercion, said "It's probably all of the above," depending on what the Chinese actions are. He pointed to the most recent example of economic coercion, against Lithuania, after that country publicly supported Taiwan's independence, and he noted that Taiwan is now going to invest $200 million in Lithuania. But Bera said sometimes the ill will generated by China's actions creates its own consequences. "I think the heavy-handed approach that China takes ... is doing our work for us," he said. "Three or four years ago I would say Australia was taking a laissez-faire approach to China. That’s not the case any more," he said, after China reacted to Australia's request that an investigation into the origin of COVID-19 go forward.
Bera said responding to China isn't just about sticks, it's also about increasing our economic engagement in Asia, whether with Taiwan or Japan or Vietnam. Bera said he wishes the U.S. could join the Trans-Pacific Partnership, but that's unrealistic now. He said arriving at a digital trade deal in Asia is still positive economic engagement that is a way of countering China.
A member of the webinar audience asked Bera if the European Union's plans to create an anti-coercion tool are compatible with the U.S. approach. "I do think it’s somewhat compatible," he said, but said that it's possible that the EU could use the new tool against the U.S.
During a panel discussion after Bera's appearance, Kilcrease said that a lot of the EU motivation for the anti-coercion tool was in response to past U.S. actions. The U.S. put Section 232 tariffs on European metals under a national security rationale, which the EU said was a fig-leaf for protectionism.
Kilcrease said the fact that the EU might use this tool against the U.S. if we put tariffs on their goods is "a good illustration of the complexity of ... trying to do this [anti-coercion work] and the importance of doing it with U.S. allies, so we’re not tripping over each others’ feet."
Would the U.S. hike tariffs on China over its coercion against allies, or only if the U.S. was the target? Kilcrease responded to this International Trade Today question by saying that even using tariffs for its own injury is tricky.
"Tariffs are essentially trying to divert trade from one place to another," she said, and if they're not "pretty precisely targeted and calibrated to not cause more damage to the U.S economy," they could be ineffective. "I’m not sure that’s the right answer if you have more tools at your disposal -- for instance, direct aid to the impacted consumers, or businesses, or countries." She said compensating a business that's being targeted by a boycott or other coercive action lessens the efficacy of that coercive action.