WASHINGTON -- The U.S. is considering investigating what it sees as unfair trade practices by China, turning up pressure on Beijing again after a friendlier approach failed to resolve the North Korea situation.
The probe could entail a wide-ranging survey of such areas as technology, including demands that foreign companies locate data centers in China. President Donald Trump could direct U.S. Trade Representative Robert Lighthizer to launch an investigation sometime soon, American media reported.
The probe would be based on Section 301 of the 1974 Trade Act, which grants the president sweeping powers to retaliate against trade practices deemed unfair, such as unreasonable subsidies or discrimination against foreign companies. It was invoked frequently in the 1980s against Japan to hike tariffs on such products as color televisions.
The measure has gone almost entirely unused since the World Trade Organization was formed in 1995. The WTO forbids members from imposing trade barriers unilaterally. Given that Section 301 is intended to do just that, at the sole discretion of the U.S., actually using it to punish China would almost certainly run afoul of these rules and run the risk of an international backlash.
Washington's China policy has been inconsistent under Trump. The country accounts for about half of America's $700 billion-plus annual trade deficit in goods. As a candidate, Trump called for extraordinarily punitive measures, such as a 45% tariff on Chinese products, to protect U.S. industry.
Trump softened his stance after taking office in hopes of winning Beijing's cooperation in dealing with North Korea's missile and nuclear development. But with Pyongyang showing no inclination to let up on its provocations, the president has made his frustration clear, taking to Twitter Saturday to declare he is "very disappointed in China."
The U.S.-China Comprehensive Economic Dialogue last month ended with no agreement on concrete steps toward reducing the trade deficit. The bilateral relationship seems to have hit a wall.
Friction between the world's two largest economies would likely have knock-on effects on other trading partners. The Trump administration is considering additional import barriers on steel from not only China, but also Japan and Europe. Countries that would be affected are eyeing retaliatory measures, raising the specter of a trade war.