US will press China for trade pact, maintain tariffs

WASHINGTON — The United States plans to launch new trade talks with China, but will maintain tariffs on Chinese imports as it urges Beijing to meet its commitments to buy more US goods and services.

The new initiative was detailed in a political speech Monday by U.S. Trade Representative Katherine Tai, in her first detailed remarks on trade between the world’s two largest economies since taking office in March.

Ms Tai said the United States would reopen a process for US companies to request tariff exemptions. The Trump administration created an exclusion process for companies that could show they did not have a viable alternative to Chinese imports, but the Biden administration allowed the process to expire.

The Biden administration has spent months reviewing China’s policy, including tariffs imposed by the Trump administration that initially taxed around $ 370 billion in Chinese imports, including consumer goods like electronics , clothing and furniture, as well as the thousands of items that are part of the supply. chain for many US factories.

In a briefing on the matter on Sunday, officials in the Biden administration said they plan to keep the tariffs in place – and consider imposing additional levies – as leverage to get China to abide by the terms of the the 2020 trade agreement with the United States.

In an interview with Bob Davis of the WSJ, US Commerce Secretary Gina Raimondo discusses the importance of strengthening the US technology and manufacturing sectors during a “tense” period in US-China relations. Photo: Zach Wood

Following her speech Monday at the Center for Strategic and International Studies in Washington, Ms. Tai was asked if she was considering future investigations into Chinese business practices, as the Trump administration has done, to impose additional tariffs. .

Ms. Tai said it would depend on China’s response to a renewed commitment, but said such investigations are “a very, very important tool. We will look at all the tools available. She declined to say whether the administration would consider new tariffs without first launching a new business investigation.

A senior administration official said before his speech that “we do not want to take any options off the table or preemptively sign up to a defined course of action.”

A centerpiece of the trade deal was Beijing’s pledge to increase its purchases of American agriculture, energy, and manufactured goods. The pact called on China to increase its purchases of goods and services by an additional $ 200 billion during the years 2020 and 2021.

China missed the commodity purchasing target by nearly 40% in 2020, according to calculations by Chad Bown, a senior researcher at the Peterson Institute for International Economics who followed the effort. Based on data from the first 8 months of the year, China is on track to be 30% below its 2021 target.

In May, Ms. Tai and Chinese Vice Premier Liu He, who was China’s top trade negotiator during the US-China trade war, had a call that was described as a virtual meeting. introduction. Both sides called the discussion frank, and Chinese officials reiterated a call for the United States to remove remaining tariffs on Chinese products.

Since then, Ms. Tai has not engaged directly with senior Chinese trade officials.

Business groups pushed the Biden administration to act faster, citing the importance of China’s huge consumer market to U.S. businesses.

“We are delighted that the administration is taking a step forward in articulating its strategy in China,” said Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce. “Engagement with allies is important, but it cannot just be engagement with allies. Direct engagement with China is essential.

In her speech, Tai pointed out that China’s business practices are hurting U.S. workers and industries.

“We will use the full range of tools at our disposal and develop new tools as needed to defend US economic interests against harmful policies and practices,” Tai said. The Biden administration “will also work with allies to shape the rules of fair trade in the 21st century and facilitate a race to the top for market economies and democracies.”

The Chinese Embassy in Washington did not respond to a request for comment.

The new attempt to engage in trade follows a call last month between President Biden and President Xi Jinping that was in part aimed at maintaining lines of communication as tensions between the two countries have grown since then. commencement of Mr. Biden. Mr Biden said nations should compete but also seek to cooperate on issues such as climate change.

The Biden administration has taken a number of measures that angered Beijing, including sanctioning those responsible for repressing predominantly Muslim Uyghurs in China’s northwestern Xinjiang region and expanding the ban on l Trump era for Americans to invest in Chinese companies with suspected ties to the Chinese military.

The United States has also sought to rally allies to confront Beijing, an objective that has received mixed reception. One of the goals has been to strengthen supply chains to depend less on China and better cope with severe shortages during the Covid-19 pandemic.

Mr. Biden also recently hosted an in-person meeting of the Quadrilateral Security Dialogue, a partnership with the United States, Australia, Japan and India focused on security in the Indo-Pacific and against a China more and more assertive. Beijing has described such efforts as a Cold War mentality.

The Biden administration also worked to reset trade relations with the European Union, which were strained by the imposition of tariffs on steel and aluminum and amid a long-standing dispute. between the United States and Europe on subsidies to aircraft manufacturers.

The US and EU rolled back tariffs in the aircraft dispute over the summer, agreed to resolve their steel and aluminum tariff dispute, and met at the a summit in Pittsburgh last week to discuss collaboration on a range of business and technology issues.

Chinese import tariffs have been a sore point for many US companies who say they have few alternatives to Chinese parts. This left many companies in a situation where they were forced to pay tariffs, but not their Chinese competitors.

When the Trump administration signed its deal with China in January 2020, it was called a “phase one” trade deal, implying that negotiations would begin soon on a second phase. However, senior officials in the Biden administration said that while they intended to pressure China on issues that had not been addressed in this deal, they doubted China was willing to consider serious negotiations on a second phase.

Write to Josh Zumbrun at [email protected] and Alex Leary at [email protected]

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