ITIF Cautions USTR Against Tariffs on Chinese Producer Goods

April 3, 2018

WASHINGTON—Following the release of the list of proposed tariffs against Chinese products by the Office of the U.S. Trade Representative (USTR), the Information Technology and Innovation Foundation (ITIF) again cautioned the administration against imposing tariffs on producer goods that support U.S. productivity growth. ITIF, the leading think tank for science and technology policy, released the following statement from its president, Robert D. Atkinson:

The Trump administration is right to push back against China’s abuse of economic and trade policy, but imposing tariffs on producer goods will inadvertently hurt Americans through reduced capital investment and lower productivity growth. The list of tariffs that USTR has proposed today would hurt companies in the U.S. by raising the prices and reducing consumption of the capital equipment they rely on to produce their goods and services.

Attempts to roll back Chinese innovation mercantilism should be more carefully targeted than this. The focus should be on things that will create the most leverage over China without raising prices and dampening investment in the kinds of machinery, equipment, and other technology that drives innovation and productivity across the economy.

For additional background on the unintended consequences of ICT tariffs, see ITIF’s recent report “Why Tariffs on Chinese ICT Imports Would Harm the U.S. Economy,” which found that a broad 25 percent tariff on Chinese ICT products would slow U.S. growth by $332 billion over the next 10 years, and a 10 percent tariff would cost the U.S. economy $163 billion over 10 years.