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Tariff Announcements Create Volatility In Financial Markets

NOEL KING, HOST:

The stock market is having a volatile week, and one thing that seems to be driving the ups and downs are a lot of worries over dueling tariff announcements from the U.S. and China. Here is a short recap. China started the week by announcing new tariffs targeting American products, and then the U.S. responded last night with a list of more than 1,000 different product lines from China that would be subjected to tariffs. And then today China responded with an additional tariff proposal that would put 25 percent tariffs on U.S. goods worth approximately $50 billion Peter Navarro is with us on the line. He's the White House trade adviser, and he is one of the architects of American tariff policy. Good morning, Peter.

PETER NAVARRO: Good morning to you.

KING: All right. I talked to you on the show last week before China had responded to U.S. tariffs. They have now done so twice this week. This was after the administration came up with a new list of tariffs aimed at China last night. We are in a back and forth, right? Do you think that this is just the beginning of a continued back and forth?

NAVARRO: I think what's important to keep in mind here, Noel, is that for 17 years now China has been stealing our intellectual property, engaging in unfair trade practices. When our companies go over to China, they force the technology transfer to their own companies and they wind up putting our companies out of business. And for America, we've lost literally millions and millions of jobs, and trillions of dollars have been exported to China in the form of a massive trade deficit. And I think what's interesting at this point in the U.S.-China relationship is how China is responding. They deny that they steal our intellectual property. Everybody knows they do it. They deny that they've forced the transfer of our technology. And so this president, Donald Trump, has had the courage and the vision to say that we need to change that relationship in a way which is beneficial to America.

KING: Let's talk about intellectual property. So the report from the U.S. Trade Representative's office said they picked items that benefit from Chinese industrial policies, which seems like a reference to China's ambition to dominate key strategic technologies. I guess a simple way of putting this is, are we trying to hit China where it hurts? Is that the game plan here?

NAVARRO: No. We're trying to basically win the battle over the emerging industries of the future. China has this manifesto called China 2025 which basically lays out a game plan to dominate virtually every emerging industry - artificial intelligence, robotics, quantum computing. If they basically seize that high ground technologically by stealing from us, we will not have a future here as a country in terms of our economy and our national security because a lot of those industries of the future have significant military application. So what President Trump is doing correctly is standing up to China. This has been going on since 2003.

KING: But if we're talking about industries of the future, might it not make sense to slap the tariffs on or to focus on intellectual property, and not worry about aluminum and steel and back and forth over pork and fruit and soybeans? Why not just go for the intellectual property, the technology sector?

NAVARRO: That's exactly what we are doing. But let's not conflate the issue of steel and aluminum versus what the China issue is. The steel and aluminum issue is a separate matter related to national security. It involves tariffs on over 20 countries simply to defend our industries, as president Trump has said correctly. We can't have a country without an aluminum and steel industry. But with respect to what we're doing with China, we're targeting technologies. What China is doing to try to weaken our will and resolve is try to target our agricultural sector because they think that they can do that for political reasons and somehow President Trump will not be resolute. Then...

KING: Does that sound like the beginning of a trade war to you? We are now salvo upon salvo upon salvo. Where do you think we stand?

NAVARRO: What this sounds like to me, Noel, is President Trump standing up for America against blatant intellectual property theft. China is a sovereign nation and has a choice at this point. So far it's choosing to deny it's doing what it's doing, and the whole world knows it's a liar. And then China is also trying to weaken our will by targeting certain segments of our economy. But, let's remember, we buy five times more goods than they buy from us. They have a lot more to lose in any escalation in this matter. And our trade deficit every year, let's be clear, our trade deficit in goods with China is about a billion dollars a day. It's about $370 billion. And so what President Trump is saying - and your listeners, I think, this resonates with them - we cannot continue to ship our goods and our jobs and our factories off to China and have a strong economy and a strong national defense. So that's what this is about.

KING: That's what this is about. Peter Navarro is the White House adviser on trade. Peter, we've got to leave it there, but, thank you so much.

NAVARRO: Good to talk to you, Noel.

KING: You too.

NAVARRO: Bye.

KING: Correspondent Scott Horsley. Hey, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, Noel.

KING: All right. So what do you think of what Mr. Navarro just told us?

HORSLEY: Well, there's general agreement within the U.S. business community that China's treatment of U.S. intellectual property is a problem and needs to be addressed. What there is also, though, is questions about the tactics that the Trump administration is applying here, whether tariffs are the best way to achieve the ends of changing China's treatment of intellectual property.

KING: Well, we didn't get a chance to ask Mr. Navarro this, but, do we know anything - the U.S. is holding some talks with China, right, to try to get China to reform their behavior in exchange for tariff relief. Do we know anything about those talks and whether or not these tariffs are just a threat to try to get to a middle ground?

HORSLEY: Those talks are happening, and neither the U.S. tariffs nor the Chinese retaliatory tariffs are set to take effect immediately. So there is an opening here for a negotiated settlement.

KING: NPR's White House correspondent Scott Horsley. Thank you, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.