U.S.-China Trade: Biden in Near Lockstep with Trump’s Policies
Whatever this administration’s clear desires to separate itself from Trump, his manner, and his policies, they do not extend to the issue of China trade.
It is strange how the commentariat gets used to things. Positions that were once described as a threat to world order, if held long enough, get little comment. So it is with America’s China trade policy. When in 2019 Donald Trump imposed steep tariffs on Chinese goods coming into this country, many economists described his policies as dangerous. The foreign policy community was, if anything, even more distressed and wrote about threats to the rules-based global trading system. But none of the former hyperbole emerged when the Biden administration recently made clear its determination to stick with the Trump tariffs and to the policies that brought the January 2020 two-phase agreement with China. Indeed, few even bothered to comment. Are such policies now safe?
U.S. Trade Representative Katherine Tai in recent talks with Chinese vice-premier Liu He certainly made clear this administration’s decision to take its trade cue largely from Trump. Although China asked Tai to lift Trump’s tariffs as a gesture of goodwill, she, speaking for the administration, replied that the tariffs would certainly remain in place. China, she insisted, had failed to abide by the first phase of the Trump agreement. Contrary to Beijing’s promises, copyright and patent infringements continue as does China’s insistence that Americans doing business in that country share technologies and trade secrets with a Chinese partner. Beijing’s recent invitation to the American financial giant Blackrock to construct and sell investment products in China was clearly seen as insufficient in fulfilling Beijing’s promise to open to American finance. Though China’s imports of American goods and services have risen smartly, the figures fall far short of the targets put into the agreement.
Tai, seemingly channeling the spirit of Trump’s approach, threatened to step up the pressure on China. She vowed to use “every tool” available to change what she described as Beijing’s “authoritarian state-centric approach to trade.” She threatened another “Section 301 investigation” of the sort Trump used to initiate the tariffs back in 2019. She accelerated the process by bringing up China’s subsidies for state enterprises and its industrial policies generally, issues that the Trump agreement schedules for a later date under the second phase of the agreement.
Surprisingly, Beijing did not try to blame its failings on last year’s pandemic emergency or on China’s economic and financial problems this year. Slower growth and the upheaval of these events might easily have explained a relative shortfall in imports of American-made goods and even why steps to change policy in other areas covered under phase one moved slower than promised. Perhaps Liu made such claims in the private parts of his meetings with Tai. But there was no sign in public comments from either side of the negotiation that anyone made such points. From the American position, it is not likely that it would have made a difference if they had.
The U.S. position did differ from Trump in one respect. Trade representative Tai promised that the United States would seek “allies” and “agreements” with other nations to raise pressure on China. Beyond the talking point, however, there was little of substance. Washington has all but discounted the rules of the World Trade Organization as applicable to the matter of China trade. Tai did not even mention the G-7 summit or the G-20 summit. She did point to the recent U.S.-EU agreement on competition between Boeing and Airbus, but if America truly wants a united front with Europe against China, it would lift Trump’s steel and aluminum tariffs on European producers. These remain in place. Neither has the United States done much to consummate a trade agreement with the newly separate United Kingdom, nor has it approached the successor to the defunct Trans-Pacific Partnership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This decision is especially noteworthy since last month China applied for admission to that agreement.
In the time since Trump’s policies caused such consternation, many in think tanks, universities, and no doubt analysts in the U.S. Trade Representative’s office have put forward proposals that might resolve the strained situation in ways that threaten the world order less than Trump’s approach seemed to do. These include ways for the United States to pressure China less directly by enlisting the assistance of international organizations. Other proposals have suggested methods to scale back on the tariffs and otherwise implement more gradual approaches than those in the January 2020 agreement. Thoughtful as some of these suggestions are, it appears apparent that the Biden White House has decided to remain as demanding and determined as was the Trump White House and in the same ways. Whatever this administration’s clear desires to separate itself from Trump, his manner, and his policies, they do not extend to the issue of China trade. Few seem to have noticed much less commented on the matter.
Milton Ezrati is a contributing editor at the National Interest, an affiliate of the Center for the Study of Human Capital at the University at Buffalo (SUNY), and chief economist for Vested, the New York-based communications firm. His latest book is Thirty Tomorrows: The Next Three Decades of Globalization, Demographics, and How We Will Live.