Tariff debate reveals Biden's struggles on China trade

WASHINGTON- President Biden Monday’s decision to try to align with Asian partners to form an economic bloc against China comes at a tim...


WASHINGTON- President BidenMonday’s decision to try to align with Asian partners to form an economic bloc against China comes at a time of frustration with his administration’s economic approach to Beijing, with some White House advisers pushing the president to move away from the Trump-era policies he has criticized and others claiming that Mr. Biden risks being considered weak vis-à-vis China if he gives in.

Some officials have grown frustrated that the United States’ trade relationship with China is still defined by policies established by President Donald J. Trumpincluding tariffs imposed on more than $360 billion worth of products and commercial commitments made during a agreement that the United States and China signed early 2020.

Concerns over the US 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 few policy purposes and could be at least partially waived to ease the financial burden on businesses and consumers.

But those ideas have been pushed back by other senior administration officials, such as some senior White House aides, the U.S. Trade Representative and labor groups. They argue that removing the tariffs – which were put in place to punish China for its economic practices – would constitute unilateral disarmament given that Beijing has yet to address many policies which motivated the measures. As the midterm elections approach, some administration officials worry that removing tariffs could leave Democrats vulnerable to political attack, according to interviews with more than a dozen current and former officials.

The business community is also lose patience with the absence of a clear business strategy nearly a year and a half into Mr. Biden’s presidency. Executives complained of a lack of clarity, which they said made it difficult to decide whether to continue investing in China, a critical market.

The challenges of figuring out how to deal with Chinese business practices have become more difficult amid Russia’s invasion of Ukraine. The United States was originally set to make changes to its trade relationship with China in early 2022, a senior administration official said, but with Beijing aligns with MoscowBiden said it was prudent to see how events unfolded in Ukraine with respect to the global economy and US allies.

Some elements of the administration’s trade strategy are becoming clearer this week. Mr. Biden announced in Japan on Monday that the United States would begin talks with 12 countries to develop a new economic framework for the Indo-Pacific region. The countries would aim to form a bloc that would provide an early warning system for supply chain issues, encourage industries to decarbonise and offer US companies reliable Asian partners outside of China.

The framework would not contain the binding market access commitments that are typical of most trade agreements, which have proven to be a tough sell for many Democrats after the withdrawal of the United States from trans-pacific partnershipthe trade agreement signed by President Barack Obama.

US officials say their goals for the framework will be ambitious and include raising labor and environmental standards and creating new guidelines for how data flows between countries. But some analysts have questioned whether the framework could encourage these changes without offering Asian countries the access to the US market that is usually the incentive in trade pacts. And U.S. labor groups already fear some commitments could lead to further outsourcing for U.S. industries.

The framework also does not attempt to directly shape trade with China. Many Biden administration officials have concluded that talks with China have proven largely unsuccessful, as have negotiations at the World Trade Organization. Instead, they said they would try to confront China by changing the environment around it by rebuilding alliances and investing more in the United States, including through a spending bill. trillion dollar infrastructure.

Senior US officials share a view similar to their counterparts in the Trump administration that the world’s dependence on China’s economy has given Beijing enormous strategic leverage. A classified China strategy that was largely completed last fall argues that it is important for US security to unbundle certain industries and diversify supply chains, according to people familiar with the strategy.

The administration was supposed to offer insight into the classified strategy in a major speech setting out economic and security goals for China, which Washington officials and Chinese experts were expecting last fall. The White House initially considered Mr. Biden to deliver the speech, but opted for Secretary of State Antony J. Blinken.

Yet the speech – which revolves around the slogan “Invest, Align and Compete”, according to those who know him – was delayed for several reasons, including the war in Ukraine and Mr. Blinken contracts Covid-19 this month. Some Chinese experts in Washington have interpreted the delays as another sign of uncertainty over China policy, but US officials insist that is not true.

Mr. Blinken is expected to deliver the China speech shortly after returning from Japan with Mr. Biden, people familiar with the planning said.

The speech avoids explicitly addressing how the administration will deal with Mr. Trump’s tariffs, they say. Companies have long complained that they hurt American companies and their consumers rather than China. This concern was reinforced by the fact that prices increase at their fastest pace in 40 years, creating a political problem for the White House, which is struggling to explain how it can mitigate soaring costs other than by relying on the Federal Reserve.

But Republicans and Democrats who want more aggressive policies toward China — and toward some U.S. companies doing business there — would try to shed blood if Mr. Biden eased tariffs.

“We need to rebuild American industry, not reward companies that maintain their supply chains in China,” Sen. Marco Rubio, Republican of Florida, said this month after vote against a legislative amendment allowing exceptions to tariffs.

At a press conference in Japan on Monday, Mr Biden said he would meet Ms Yellen when he returned from his trip to discuss his call to remove some of the Chinese fares.

“I’m thinking about it,” the president said. “We didn’t impose any of these tariffs; they were imposed by the previous administration, and they are under consideration.

Public differences between Biden officials have been rare, but when it comes to tariffs, the debate has spilled out into the open.

“There are definitely different views within the administration, and they’re surfacing,” said Wendy Cutler, vice president of the Asia Society Policy Institute and a former U.S. trade negotiator. “There are those who think the tariffs have not worked and are contributing to inflation. Then you have the trade negotiator side that says, “Why would we give up on them now? “They are a good lever.

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

Katherine Tai, US Trade Representative; Tom Vilsack, Secretary of Agriculture; Jake Sullivan, National Security Advisor; and others opposed the removal of tariffs. Ms Yellen, Commerce Secretary Gina Raimondo and other officials have pointed to the benefits to businesses and consumers of adjusting them, people familiar with the talks said.

Mrs. Yellen has long been voice of skepticism about tariffs and grew increasingly frustrated with the pace of progress in changing trade, said people familiar with her thinking. She argued last week for some of the tariffs to be scrapped to offset rising prices.

“Some relief could come from removing some of them,” Ms Yellen said, explaining that the tariffs hurt consumers and businesses. “There are a variety of opinions, and we haven’t yet settled or come to an agreement on where to stand on tariffs.”

Daleep Singh, deputy national security adviser, was more outspoken during an April 21 webinar. “We inherited these tariffs,” he said, “and while they created leverage for negotiation, they serve no strategic purpose.”

For products that don’t strengthen critical supply chains or support national security, “there’s really no reason for these tariffs to be in place,” Singh said. “Why do we have customs duties on bicycles, clothes or underwear? »

But the union leaders, progressive democrats and some industry representatives made various arguments in favor of maintaining strict tariffs, several pointing to data showing that imports from China are not the main drivers of inflation.

“For a Democratic president to get rid of Republican-imposed tariffs and basically give free handouts to the Chinese Communist Party is not really politically wise in any form,” said Scott N. Paul, the president of the Alliance for American Manufacturing, which represents steel companies and workers.

Economists also believe the impact of removing tariffs would be modest. Jason Furman, an economist at Harvard University and former chairman of Mr. Obama’s Council of Economic Advisers, estimates that eliminating all Chinese tariffs would lower the consumer price index by half a percentage point, which increased by 8.3% in April compared to the previous year. .

Yet, Mr. Furman said, when it comes to reducing inflation, “cutting tariffs is the greatest tool the administration has.”

The Office of the United States Trade Representative has launched a statutory revision of tariffs this month and says its approach to analyzing them is on the right track. “We need to make sure that everything we are doing right now, first of all, is effective and, secondly, does not compromise the design and the medium-term strategy that we know we must pursue”, Ms. Tai said in an interview May 2nd.

Some Biden administration officials appear to favor an outcome that would lift some tariffs while increasing other trade sanctions against China, a process that would take at least several months. This could be done through a separate investigation under the so-called Section 301 proceeding into China’s use of industrial subsidies.



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Newsrust - US Top News: Tariff debate reveals Biden's struggles on China trade
Tariff debate reveals Biden's struggles on China trade
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