I am hearing some talk that the ongoing Section 301 investigation related to certain Chinese government practices will result in President Trump imposing tariffs against Chinese imports. This is from Axios:
It's quite likely Trump will use 301 authority — in January, we're told — to put tariffs on Chinese consumer electronics as retaliation against the country's widespread theft of American companies' intellectual property. Though Cohn and Mnuchin don't like tariffs, they're comparatively comfortable with targeted actions against truly bad actors, as in this case.
I don't have data on this, but based on my recollection of 2017, many reports on what Trump was about to do on trade turned out to be wrong, so I'm a little skeptical. But let's think about the possibility of tariffs anyway: What might Trump do, and how might China respond?
One possibility is that Trump announces the potential future imposition of tariffs. This is an easy route, because he can bluster loudly about it, but it won't have an actual impact right now. China can then bluster back, without retaliating. In the current state of affairs, this is what we call a win-win! Practically speaking, this approach could mean that the administration announces that tariffs will be imposed in 1 year, if China doesn't change its practices. That gives everyone a year to work out some agreement that avoids actual tariff imposition.
Another option is that the administration can find a way to raise tariffs that does not obviously violate WTO obligations. Are there some categories of Chinese imports for which U.S. applied tariffs are less than the bound rate? The U.S. could raise those tariffs for all countries. If this happened, China might just ignore the whole thing, or they may look for some similar action to take that hurts the U.S. a bit. (There could still be a WTO claim here, of course, but the violation would be less obvious than raising tariffs on Chinese imports above the bound rate).
Finally, there is the "trade war" scenario, where the U.S. raises tariffs in a way that targets Chinese products and violates WTO obligations. In this situation, China is sure to bring a WTO complaint, but it might also retaliate immediately. It could probably find a number of retaliation options that would harm U.S. economic interests, either in violation of WTO rules or not, depending on how it wanted to approach things. China could also stop cooperating on security issues such as North Korea, which might be its most powerful option.
I still have doubts that these tariffs will happen, but people who are better connected than I am have been saying that it will, so I guess it's worth preparing for.
Scott Lincicome has a lot more on the Section 301 investigation here. He concludes with this advice:
a smart course of action could entail both unilateral and multilateral responses that would be more consistent with U.S. law and WTO rules, more likely to achieve Chinese policy changes, and less likely harm U.S. economic and geopolitical interests. In particular: (1) a broad WTO dispute following the procedures set forth in Section 301 and the SAA and joined by other WTO Members with similar complaints against Chinese IPR practices; and (2) a targeted unilateral response for those Chinese government acts (e.g., allegation 4 above on state-sponsored hacking) that clearly fall outside the WTO Agreements. The first U.S. action would reassert the United States’ leadership on an important global trade issue and deny China that same position, while the second U.S. action would let President Trump brag about his strong unilateral response to Chinese “economic aggression” (though he’d need to use something other than tariffs to be perfectly consistent with WTO rules).