Trump advisor Hassett: US firms get crushed by China's 'forced joint ventures' on top of high tariffs

Key Points
  • China is stealing U.S. technology through unfair requirements for market access, White House economic advisor Kevin Hassett says.
  • Unlike the separate steel and aluminum tariffs, "everybody is unified" behind the punitive Chinese measures, Hassett says.
  • "If we had reciprocal tariffs worldwide," he says, "there would be a massive reduction" down to the U.S. level.
CEA's Hassett: Trump's trade plan designed towards negotiations
CEA's Hassett: Trump's trade plan designed towards negotiations

Aside from fleecing American companies with high import tariffs, China is stealing U.S. technology through unfair requirements to do business in the world's second-largest economy, Trump economic advisor Kevin Hassett told CNBC on Monday.

Hassett, chairman of the White House Council of Economic Advisers, was explaining the nuances behind last week's announcement by President Donald Trump to levy up to $60 billion in tariffs on Chinese imports. The Trump administration argues that China's trade practices involve stealing American companies' intellectual property.

The office of the U.S. Trade Representative accuses China of using "joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to force or pressure technology transfers from American companies."

Hassett used a hypothetical example to make the point. "[If companies] were selling their coffee in China, then China would say, 'Sure you have access to our market, but we have to set up a joint venture with a Chinese partner.' So then every $100 in sales, ... it's $50 to us and $50 to the partner."

The USTR went through all the joint venture deals and other measures that result in intellectual property theft and added up the sales that didn't happen to pinpoint the amount of tariffs that should be assessed against China, Hassett said.

Chinese Premier Li Keqiang said Monday that Beijing would not force foreign firms to transfer technology and would strengthen intellectual property rights. While reiterating pledges to ease access for U.S. businesses, he also said China and America should maintain negotiations.

Meanwhile, U.S. Treasury Secretary Steve Mnuchin told "Fox News Sunday" he's optimistic a trade agreement will eventually be negotiated with China.

On Friday, China responded to Trump's tariffs with a proposed target list of 128 U.S. products that had an import value of $3 billion last year.

Unlike the separate import tariffs of 25 percent on steel and 10 percent on aluminum announced by Trump on March 1, "everybody is unified" behind the punitive Chinese measures, said Hassett, formerly an economist at the American Enterprise Institute and senior economist at the Federal Reserve.

"The president has been clear that he wants to set a marker down with some big asks at the beginning. He doesn't want to dribble them out. And then he wants his negotiators to fix the trade problems," Hassett said on "Squawk Box."

Hassett also pointed out the steel and aluminum tariffs were billed initially as across-the-board measures but were tempered by exemptions for Canada and Mexico, with the promise of more to come for U.S. allies in what the White House considers good standing.

"It's all designed to move us toward negotiations to make the world a better place," said Hassett. "If we had reciprocal tariffs worldwide, think about it, there would be a massive reduction in tariffs around the world down to the U.S. level. And that reduction would increase global output, profits and investment and sentiment."

Prior to his White House appointment, Hassett was a consultant to the Treasury Department and an advisor to Republican presidential campaigns, including Mitt Romney's unsuccessful 2012 run.

FULL INTERVIEW: Hassett on possible tax cuts 'phase 2'

CEA's Hassett on tariff challenges and trade war fears
CEA's Hassett on tariff challenges and trade war fears