American Companies In China Are Concerned About Tariffs, Zarit Says

Jul 6, 2018
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STEVE INSKEEP, HOST:

Again and again, President Trump has insisted it is easy to win a trade war. Most economists see it differently, but Trump's actions overnight suggest the president believes what he says. After months of threats, the United States imposed tariffs on $34 billion worth of Chinese imported goods. China responded with tariffs on American products. So how's all this look if you're an American doing business in China? William Zarit is chair of the American Chamber of Commerce in China. He's on the line once again from Beijing. Welcome back to the program.

WILLIAM ZARIT: Thank you.

INSKEEP: What does all this mean for American companies in China?

ZARIT: American companies are very concerned. The consensus has been - and it depends on what industry sector you are in, but - the consensus has been for the first tranche, the $34 billion plus the next $16 billion that the U.S. are talking about putting tariffs on, companies will feel some pain. But it's after that that companies are very, very concerned, if it goes to the next level.

INSKEEP: Well, let's remember that the president has said that he was unhappy that China threatened to retaliate for these early tariffs, and he's lined up a couple-hundred billion more, he claims. And now China has retaliated. Aren't we pretty much headed that way that you just said you're worried about?

ZARIT: Our feet are headed in that direction. We continue to hope that after this first battle that the two sides will get together and start talking. At the moment, there is virtually no communication about trying to resolve this trade battle. So hopefully after the first tranche and folks start to realize the pain and the White House hears more and more complaints about how it's hurting U.S. companies, that negotiations may commence.

INSKEEP: The president's assumption has been that there's not going to be a lot of complaint from the American side. He's publicly said, China will suffer way more. We have a trade deficit with China, therefore they'll be losing all the money. Is that correct?

ZARIT: Well, I think that China will actually feel more pain. You know, its economy right now is in a soft spot. Investment is down. Consumption is down. Export growth is down. So I think that the Chinese might actually suffer more. But, you know, the Chinese party and the government control the media as well as a good bit of the economy. So I think that if there were something that kept on going for a long time that they would be able to muddle through, whereas U.S. consumers, U.S. companies would make a lot more noise.

INSKEEP: Well, let's try to figure out some of the effects here. Jeremy Haft, who does business in China, was on the program earlier today and says he already sees increased pressure on U.S. companies - not tariffs, just making life harder for those of you doing business there. Are you seeing that?

ZARIT: Yes. We're seeing that, whether it's holding up a certification of a product, whether it's holding up goods in customs, whether it's a surprise visit to the factory for an inspection and finding things that may or may not exist, we're already seeing that. And the Chinese are very well-practiced at doing these what we call the qualitative trade remedies, or, unwritten trade barriers.

INSKEEP: Let me ask you another thing. You can be critical of the way the president is approaching this problem, the idea of raising tariffs, but the United States has raised a complaint that is widespread longstanding from the U.S. side that China has been demanding technology transfer from U.S. companies, that China steals secrets and essentially behaves unfairly. Is there a more workable way to address that than a trade war?

ZARIT: I think there is. You know, we've had a grand bargain with the Chinese up until very recently where we got inexpensive goods, our companies prospered, our consumers saved money and even our politicians had their constituents getting cheaper goods. And, of course, in exchange for that, the U.S. kind of winked-winked, nod-nod and allowed this unfair economic relationship to go forward because we were benefiting. But that's over. And in order to, I think, to level the playing field, what we need is a new grand bargain. And that would be the Chinese will open their investment markets, open their import markets to U.S. goods more or less on an equivalent basis to what the U.S. is open. Actually, the Chinese economy would benefit if it would do this. So I think this is the best way to go forward.

INSKEEP: You hope that can happen, but, is it going to be necessary, really, to have a trade war to make them take that seriously?

ZARIT: Well, I think you have made a good point because up until now we've been talking with the Chinese for 20-some years, and we really haven't gotten much in terms of opening up those markets. So I think that this administration should be congratulated for at least getting China's attention and hopefully bring them to the negotiating table, and we can talk about opening up Chinese markets, which is in its own benefit.

INSKEEP: William Zarit of the American Chamber of Commerce in China, thanks very much.

ZARIT: Thank you. Transcript provided by NPR, Copyright NPR.