Trump administration officials have said they are considering the use of the 1977 International Emergency Economic Powers Act to impose new restrictions on China, an act widely used to freeze assets after the 9/11 attacks in 2001.
Meanwhile, after months of tough talk, the threats against China, Canada, Mexico and the European Union soon will turn into tariffs that are already triggering retaliation against USA exports.
But contradictory statements Monday from senior U.S. officials have muddied the waters on what path the White House will take. However, China is at a disadvantage if they exclusively rely on tariffs, because there are less Chinese goods being exported to the U.S. In 2017, China imported $505,470 worth of U.S. goods but exported only $129,893 worth of goods to the U.S. However, other tactics for fighting back against Trump could include convincing the 1.4 billion Chinese citizens to not buy American products, increasing inspections of imports, delaying licenses, hindering M&A deals that America is involved in, and so on. Treasury Secretary Steven Mnuchin took to Twitter today to contradict reports that companies with at least 25 percent Chinese ownership will be barred from buying US companies with "industrially significant technology".
According to The Wall Street Journal, the measures likely would target investments in the United States by any firm that is 25 percent Chinese held, although that threshold could drop if the investment is considered sensitive.
The Dow Jones Industrial Average plummeted more than 400 points on Monday after Treasury Secretary Steven Mnuchin's comments that investment restrictions would not be limited to China, "but to all countries that are trying to steal our technology".
The Trump administration is expected to announce limits on Chinese investment soon - a move that is shaking the business world.
The S&P 500 Index closed down 1.35%, which says many U.S. investors believe the worst case scenario won't happen with a trade war and I hope they're right but we're gambling with the former casino owner called Donald Trump. "So this whole idea that there's going to be investment restrictions to the world, please, discount that", Navarro said.
"People are scared", said Wayne Kaufman, chief market analyst at Phoenix Financial Services in NY.
The economy "is going to a lovely place right now", Navarro said on CNBC. -China relationship, including the USA decision to brand China a strategic competitor in President Donald Trump's National Defense Strategy. The measures have bipartisan support and the backing of top Trump administration officials.
Even the hint of a possible CFIUS review can kill a potential investment. Congress, in parallel, is working on reform legislation to CFIUS that would scrutinize inbound investment in the US on national security grounds.
A survey released last week by the European Union Chamber of Commerce in China showed that a slim majority of members thought foreign-invested companies are treated unfairly, and nearly two-thirds see a lack of reciprocity between the access to China's markets that they get, and the access Chinese companies get to Europe.
The twin initiatives, set to be announced by the end of the week, are created to prevent Beijing from moving ahead with plans outlined in its "Made in China 2025" report to become a global leader in 10 broad areas of technology, including information technology, aerospace, electric vehicles and biotechnology.
As tensions continue to escalate, trade experts warn there are fewer options to resolve the dispute. "I think we'll settle these questions, because we have established a very good relationship with President of China XI Jinping", he said.
"There are serious structural concerns about Chinese practices that can not be resolved without trust between the negotiating partners" and that trust is eroding in the current confrontation, he told AFP.
"What's crucial is that both sides, no matter what the sector, can, in the spirit of mutual respect and understanding, expand cooperation and manage and control differences, to appropriately handle disputes between the two countries", stated China's Foreign Ministry spokesman Lu Kang.
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