Lawmakers are calling for raising tariffs and cutting economic ties with China

Bipartisan lawmakers on Tuesday called for cutting more of America’s economic and financial ties with China, including rescinding low tariffs the United States granted Beijing after the country joined the World Trade Organization more than two decades ago.

The House Select Committee on the Chinese Communist Party has issued a wide range of recommendations to repair America’s economic relationship with China. The report, which was signed by both Democrats and Republicans in the House of Representatives, argued that China had waged a “multidecade campaign of economic aggression” that had undermined American businesses, dominated crucial global industries and left the United States deeply vulnerable made in the event of a broader crisis. military conflict.

The 53-page report included dozens of recommendations that Congress and the administration could take to offset these vulnerabilities. These ranged from imposing new tariffs on older types of Chinese chips to further cutting off the flow of capital and technology between the world’s largest economies.

The report’s other recommendations included requiring publicly traded U.S. companies to disclose ties to China and further invest in U.S. research and manufacturing capabilities to counter Chinese dominance of sectors such as pharmaceuticals and crucial minerals . It also suggested developing plans to coordinate economically with allies if the Chinese government invades Taiwan.

Many of the recommendations may never be adopted by a divided Congress. But the report could provide a path to bipartisan legislation on China in the coming months.

Rep. Mike Gallagher, Republican of Wisconsin and chairman of the committee, said in an interview that he would like to see Congress meet on a major China bill next year ahead of the presidential election. He said that while some U.S. companies oppose restrictions on doing business with China — a large and growing market — legislation that clarifies what is allowed would be beneficial to many companies.

“If Congress doesn’t step in and do something legislatively,” Mr. Gallagher said, “we will be bouncing back and forth between different executive orders with completely different rules that create chaos for Wall Street and the market.”

The report is a tangible sign of the extent to which the bipartisan consensus on China has shifted in recent years.

The most common argument a decade ago was that economic interdependence between the United States and China would be a force for peace and stability. Some — including Biden administration officials — still say business ties could help stabilize the relationship and promote peace.

But that theory has increasingly given way to fears that ties with China could be weaponized in the event of a conflict. For example, it could be catastrophic for the U.S. economy or military if the Chinese government cuts off supplies of pharmaceuticals, minerals, or weapons system components to the United States.

Beijing’s subsidization of Chinese companies and cases of intellectual property theft have also become an increasing source of friction. In some cases, China has allowed foreign companies to operate in the country only if they form partnerships that transfer valuable technology to local companies.

The report stated that the United States had never before faced a geopolitical adversary with which it was so economically tied, and that the full extent of the risk of relying on a strategic competitor remained unknown. The country does not have a contingency plan in place in case further conflicts arise, it said.

“Addressing this new struggle will require a fundamental reevaluation of U.S. policy toward economic engagement with the People’s Republic of China, as well as new tools to address the People’s Republic of China’s campaign of economic aggression,” the report said, citing abbreviation for People’s Republic of China is used.

This year, the committee organized a tabletop exercise to simulate how the United States would respond if the Chinese government invaded Taiwan. The report found that U.S. efforts to deter China through sanctions and financial punishment “could impose enormous costs on the United States,” the report said.

The report makes a variety of other recommendations, including increasing the authority of a commission that reviews foreign investments for threats to national security and devising new high-quality trade deals, especially with Taiwan, Japan and Britain.

But the report’s first recommendation, and perhaps its most important, is to phase in a new set of tariffs on China over a short period of time.

When China joined the World Trade Organization in 2001, the United States and other members began offering China lower tariffs to boost trade. In return, China began implementing a series of reforms to bring its economy into compliance with the organization’s rules.

But the report argued that China had consistently failed to deliver on promised reforms, and that the “permanent normal trade relations” granted to China by the United States after its WTO succession had not delivered the benefits or economic reforms that Congress had expected. According to the report, Congress should now apply a different, higher set of tariffs to China.

Such a move has been discussed by lawmakers and is supported by former President Donald J. Trump and other Republican candidates. Last year, Congress voted to end permanent normal trade relations with Russia after the invasion of Ukraine.

But raising tariffs on China, one of the United States’ largest trading partners, would draw more opposition from the business community because it would raise the cost of products imported from China and most likely slow economic growth.

The United States already has significant tariffs on many Chinese products, imposed during the Trump administration’s trade war and maintained by President Biden. The further changes proposed by Congress would increase duties on other items, such as toys and smartphones, that do not attract additional taxes.

a study published by Oxford Economics in November and commissioned by the US China Business Council, it was estimated that such tariffs alone would lead to a loss of $1.6 trillion for the US economy over a five-year horizon. It would also likely cause further friction at the World Trade Organization, where the group’s most steadfast supporters have already accused the United States of undermining its rules.

The lawmakers’ report acknowledged that such a change would be an economic burden, and suggested Congress consider additional credits for farmers and other support for workers.

Mr. Gallagher said it would not be easy to extricate the United States from its “deep economic entanglement” with China, and that Washington should work to develop alternative markets and prepare for possible retaliation from Beijing.

Reaching consensus on the report took months of negotiations between Democrats and Republicans, which the authors say should send a message to China.

“One of the theories that the CCP has about the United States is that we are divided, that we are tribal, that we are unable to come together to meet challenges,” said Rep. Raja Krishnamoorthi of Illinois, the top Democrat of the committee, referring to the Chinese Communist Party. “On this specific issue of competition between the United States and the CCP, we agree.”