In a highly anticipated speech by United States Trade Representative Katherine Tai outlining the Biden administration’s approach to China, trade policy watchers were left with more questions than answers. Under repeated requests for clarity, the administration has held firm that it was reviewing all actions taken by the Trump administration before laying out its own approach. Almost one year after the presidential election, however, the administration has little to show for all this reflection. In fact, the vision outlined in Tai’s speech this week was a repackaging of her predecessor’s approach—different in style but not in substance. For those looking for a definite signal on where U.S. trade policy towards China is going, this week’s announcement was a disappointment. But the fact that the Biden team has failed to articulate a clear policy may not be as bad as it seems. Instead, it provides an opening for a frank discussion on where things should go, if the administration is willing to listen.
Tai spelled out four efforts as “the starting point” for “realigning our trade policies with China.” The first is to enforce the Phase One deal negotiated under Trump, part of which included a number of commitments from China to purchase various American goods. As Chad Bown from the Peterson Institute for International Economics has comprehensively detailed, China has fallen short of those commitments. The second is to expand the exclusion process for U.S. businesses that have been impacted by the tariffs levied by the Trump administration, many of which are still in place. In fact, as Bown notes, “the United States retains tariffs imposed by President Trump covering over $135 billion—or 93 percent—of imports of intermediate inputs from China.” As my colleague Scott Lincicome has also detailed, these tariffs have hurt the U.S. economy, and have had little impact on the Chinese economy. Furthermore, the exclusion process has been fraught with challenges, including inconsistencies in documenting exclusion requests—a finding by the Government Accountability Office. Despite these problems, Tai seems to be embracing these Trump era policies fully, which is certainly a cause for concern.
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