Tariff controversy exposes Biden’s difficulties in Chinese trade

Washington – President BidenMonday’s decision to try to accommodate the Asian partners of Formation of an economic bloc Anti-China comes at a moment of frustration with his administration’s economic approach to Beijing, with some White House advisers pushing the president to turn away from Trump-era policies he has criticized, and others arguing that Biden risks being seen as weak toward China if he regrets.

Some officials are frustrated that US trade ties with China are still in place Identified by the policies set by President Donald J. TrumpIncluding Tariffs imposed on more than $360 billion of products and business commitments made during a Agreement signed by the United States and China in early 2020.

Concerns about the United States’ economic approach to China have taken on new urgency amid rapid inflation. Treasury Secretary Janet L. Yellen and other officials argued that the full set of tariffs served little strategic purpose and could be lifted at least in part to ease the financial burden on businesses and consumers.

But these ideas were met with responses from other top administration officials, such as some top White House aides, the United States Trade Representative, and labor groups. They argue that eliminating tariffs – which were set up to punish China for its economic practices – would constitute unilateral disarmament given that Beijing still has many policies to address That prompted the action in the first place. With the midterm elections looming, some administration officials worry that eliminating tariffs could leave Democrats vulnerable to political attacks, according to interviews with more than a dozen current and former officials.

The business community is also lose patience With no clear business strategy after nearly a year and a half of the Biden presidency. Executives have complained about the lack of clarity, which they say has made it difficult to determine whether to continue investing in China, a critical market.

The challenges in figuring out how to counter Chinese trade practices have become more difficult amid the Russian invasion of Ukraine. A senior administration official said the United States was originally moving toward making changes to its trade relationship with China in early 2022, but with Beijing aligns with MoscowMr. Biden felt it would be wise to see how events unfold in Ukraine in relation to the global economy and US allies.

Some elements of the administration’s trade strategy became more evident this week. Mr. Biden announced in Japan on Monday that the United States will start talks with 12 countries to develop a file new economic framework For the Indo-Pacific region. The countries aim to form a bloc that would provide an early warning system for supply chain issues, encourage industries to decarbonize and provide reliable Asian partners for American companies outside of China.

The framework will not contain the binding market access commitments that are typical of most business deals, and which have been shown to be a Hard to sell to many Democrats After the United States withdrew from Partners across the PacificTrade agreement signed by President Barack Obama.

US officials say their goals for the framework will be ambitious and will include raising labor and environmental standards and establishing new guidelines for how data flows between countries. But some analysts have questioned whether the framework could encourage these changes without offering Asian countries access to US markets that are usually the catalyst in trade agreements. US business groups are already concerned that some of the commitments will lead to further outsourcing of US industries.

The framework also does not attempt to shape trade with China directly. Several Biden administration officials concluded that talks with China proved largely futile, as did negotiations at the World Trade Organization. Instead, they said, they would try to counter China by changing its environment by rebuilding alliances and increasing investment in the United States, including through a trillion-dollar infrastructure spending bill.

Senior US officials take a similar view as their counterparts in the Trump administration that the world’s reliance on the Chinese economy has given Beijing enormous strategic leverage. People familiar with the strategy say China’s ranked strategy largely finalized last fall argues that it is important for US security to separate some industries and diversify supply chains.

The administration was supposed to provide a glimpse into the secret strategy in a major speech outlining China’s economic and security goals, which Washington officials and China experts predicted would happen last fall. The White House initially considered having Biden deliver the speech but settled on Secretary of State Anthony J. Blinken.

However, the speech – which revolves around the slogan “Invest, line up and compete,” according to those familiar with it – has been delayed for several reasons, including the war in Ukraine and Mr. Blinken contracted with Covid This month. Some Chinese experts in Washington interpreted the delays as another sign of uncertainty about China’s policy, but US officials insist that is not true.

Mr. Blinken is expected to deliver the China speech soon after he returns with Biden from Japan, say people familiar with the planning.

They say the letter avoids explicitly addressing how the administration has handled Mr. Trump’s definitions. Companies have always complained that they hurt American companies Its consumers, not China. This concern has acquired new urgency due to this Prices are going up At its fastest rate in 40 years, creating a political problem for the White House, which has struggled to explain how it could mitigate huge costs other than relying on the Federal Reserve.

But Republicans and Democrats who want more aggressive policies toward China — and some US companies that do business there — will try blood if Biden eases tariffs.

“We need to rebuild American industry, not reward companies that maintain their supply chains in China,” Senator Marco Rubio, R-Fla., said this month. vote against Legislative amendment allowing deductions from tariffs.

At a press conference in Japan on Monday, Mr. Biden said he would meet with Ms. Yellen upon his return from his trip to discuss her call to remove some tariffs on China.

“I’m thinking about it,” said the president. We did not impose any of these definitions; They were imposed by the previous administration and they are under study.”

Public disagreements between Biden officials have been rare, but when it comes to definitions, the controversy has spilled out into the open.

“There are certainly different views in the administration, and they are surfacing,” said Wendy Cutler, vice president at the Asian Society Policy Institute and former US trade negotiator. There are those who believe that tariffs have not worked and that they are contributing to inflation. Then you have the side of the trade negotiator who says, “Why are we giving them up now? It’s good leverage.”

The debate about how and when to adjust these tariffs reflects a larger debate about whether globalized trade has done more to help or harm Americans, and how the Democratic Party should approach trade.

Catherine Taye, United States Trade Representative; Tom Vilsack, Secretary of Agriculture; Mr. Sullivan and others have argued against dropping tariffs. Ms. Yellen, Commerce Secretary Gina Raimondo and other officials noted the benefits to businesses and consumers of the amendment, people familiar with the discussions said.

Mrs. Yellen has always been a voice of doubt on tariffs and her growing frustration with the pace of progress in trade developments, according to people familiar with her thinking. The case was made clear last week to scrap some tariffs as a way to offset higher prices.

“Some of the relief may come from cutting some off,” Yellen said, explaining that tariffs are hurting consumers and businesses. “There are a variety of opinions, and we really haven’t resolved them yet or come to an agreement on where the tariffs will be.”

Dalip Singh, the deputy national security adviser, was more vocal in a webinar on April 21. “We have inherited these definitions, and while they may have created negotiating power, they serve no strategic purpose,” he said.

For products that do not enhance critical supply chains or support national security, Mr Singh said, “there is not much argument for applying these tariffs.” “Why do we have tariffs on bicycles, clothing or underwear?”

But the labor leaders, Progressive Democrats Some industry representatives have put forward various arguments for keeping the tariffs strict, with many arguments Pointing to the data It turns out that imports from China are not the main driver of inflation.

Scott said. President of the Alliance for American Manufacturing, which represents steel companies and their workers.

Economists also believe that the effect of removing tariffs will be modest. Jason Furman, a Harvard economist and former chair of Obama’s Council of Economic Advisers, estimates that removing all tariffs on China will reduce half a percentage point from the consumer price index, which grew by 8.3 percent in April.

However, when it comes to lowering inflation, Foreman said, “reducing tariffs is the single biggest tool the administration has.”

The Office of the United States Trade Representative began this month a Legal review of tariffs She says her approach to her analysis is on the right track. “We need to make sure that everything we’re doing now is, first and foremost, effective, and second, it doesn’t undermine the design and the mid-term strategy we know we need to pursue,” Mrs. Tai said in an interview On May 2nd.

Some Biden administration officials seem to favor an outcome that would raise some tariffs while increasing other trade sanctions on China, a process that could take at least several months. That could happen through a separate investigation under the so-called Section 301 process into China’s use of industrial subsidies.

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