Trade Wars

White House debates to delay Biden’s plan for tariffs on major Chinese industries

The delay risks creating a deeper backlash against Democrats ahead of midterms. Companies whose manufacturing costs rose as a result of tariffs expected Biden to call off Trump’s trade wars. But Biden must also weigh those demands against his desire to appear tough on Beijing for an electorate increasingly worried about China’s economic might, as well as the desires of his union supporters to preserve tariffs on key industries like China. steel.

“I have a lot of clients who are fed up with Trump and voted for a moderate, pro-business Biden,” said Brian Johnson, director of the Vogel Group, a corporate lobbying firm. “How much will these policies dig into their bottom line will affect their behavior.”

Trump’s business legacy remains largely unchanged since Biden took office 10 months ago: Levies on $ 350 billion of Chinese goods are still in place. China also broke the deal it signed with Trump in early 2020 to buy $ 200 billion worth of U.S. agricultural products and other goods. Tai, in a speech in early October, announced that she would resume talks on the implementation of the trade deal and said the Biden administration did not want to “ignite” tensions with China.

But Sullivan, one of the most aggressive Chinese hawks in the White House, had pushed for further measures to be announced towards higher tariffs on industries Beijing subsidizes during the administration’s months-long review. Trump’s trade policies, those familiar with the negotiations said.

Tai opposed such swift action, arguing that it would poison new negotiations with Beijing and that the Biden administration should not abandon America’s previous trade commitments, even those made under Trump, the people said. Under trade law, the United States is required to enter talks with a target country before taking action to add new tariffs.

The White House said Biden’s team are now on the same page after Trump’s lengthy trade policy review, which involved contributions not only from Sullivan and Tai, but from the departments of Commerce, the Treasury. and others.

The Biden administration has conducted a rigorous interagency review of US-China trade relations to implement President Biden’s vision to rebalance US-China trade and economic relations in a way that protects American workers from unfair trade policies and strengthens the middle class, “said a senior administration official.

“The final decision had the full support of President Biden, the National Security Council and relevant agencies,” a USTR spokesman added.

U.S. law requires the White House to first examine whether a foreign government is unduly subsidizing its domestic industries before imposing new tariffs. It’s unclear when White House Biden will do it, but people familiar with the administrative conversations said it likely depended on how the Chinese engaged in the early rounds of talks.

Regardless of Beijing’s reaction, administration officials don’t expect China to ultimately comply with the trade deal it signed with Trump in early 2020, especially its pledges to protect US intellectual property and other domestic economic reforms. This will give the White House a rationale for opening a new tariff investigation and ultimately imposing new duties on some products, while reducing others.

Besides a new tariff inquiry, Biden’s team could officially accuse China of failing to comply with the trade deal negotiated by Trump. But going through the deal process would likely take years to result in new tariffs or other trade sanctions, so the White House is leaning towards a new investigation, the people said. But the USTR said all options remained on the table.

“If we conclude that [China] does not honor a particular commitment, we will consider appropriate action, including under the phase one agreement itself, but no decision has been made, ”the USTR spokesperson said.

The Biden administration will likely seek a narrower and steeper tariff structure for China, said the two people familiar with the administration’s plans. While Trump has imposed tariffs on thousands of products imported from across the Chinese economy, the White House is considering higher tariffs on industries that receive the most subsidies and other support from the Chinese government. These could include steel, solar panels, batteries, semiconductors, and other technologies.

“We are not going to prejudge the outcome of the discussions with the [Chinese government]”said the USTR spokesman.” At the same time, as Beijing continues its unfair and coercive practices, we are ready to use the full range of our tools to ensure that the US-China trade relationship works. for workers, industry and supply chains. “

The White House will also seek to grant tariff relief, either by reducing tariffs or granting exemptions, to businesses not served by Beijing’s most advantaged sectors. Sullivan and other administration officials believe it would allow them to punish China for what they see as underhanded business practices, while providing relief to some U.S. companies hit by the trade war. Already, the White House has reopened the process for companies to request tariff exemptions on more than 500 products from China, and has indicated that other possibilities for exemptions are underway.

Trump’s tariff cut has support from the Senate Finance Committee, even from Republicans. Democratic senses Bob Menendez (NJ) and Ben Cardin (Md.) Both said in interviews they wanted Biden to announce a new tariff inquiry. And Finance Committee Ranking Member Mike Crapo (R-Idaho) said he would welcome the White House’s cut in tariffs that hit US industry.

“There must be adjustments, or deviations, or different refined applications of our [trade] sanctions policy, otherwise we’ll hit our own US producers, ”Crapo said. “If we’re going to investigate this, we need to make sure that the enforcement of our sanctions doesn’t look like a bull in a china store. It must be refined and well done.

Doug Palmer contributed to this report.