U.S. companies expecting a new approach to international trade policy after four years of struggle under Donald Trump have a question for the Biden administration: what will be its tariffs on China?
An unbalanced trade balance with China, the largest source of imports into the United States, became an element of Donald Trump’s trade policy. It imposed tariffs on billions of dollars worth of Chinese products, including clothing, footwear and food, disappointing business groups who, in turn, endorsed their lower taxes and lighter regulation.
Under Joe Biden, most rates remain, however, and some American business groups are uneasy.
“We’ve spent five months in this new administration and we still don’t have a clear idea of what China’s trade policy is,” said Jon Gold, vice president of the National Retail Federation. “This is having a huge impact on companies, many of which are struggling to survive through Covid and have the additional burden of tariffs.”
While Biden has worked with allies to counter China, his overall policy toward Beijing is closer to Trump’s approach than experts had expected. Meanwhile, the cost of US tariffs for companies buying in China has risen. A mechanism that allowed companies to apply for exclusions from so-called Section 301 tariffs on Chinese imports expired late last year and has yet to be reinstated.
More than 3,500 U.S. companies, including Coca-Cola, Disney and Ford, as well as smaller U.S. manufacturers, filed lawsuits against the Trump administration for their tariffs in China, setting a record number of lawsuits filed in Commerce International of the United States, based in New York. Audiences have been scheduled for this year.
“Tariffs are deeply unpopular with U.S. consumers and businesses that bear the cost,” said Doug Barry, a spokesman for the U.S.-China Business Council, a trade agency. “Many rates remain in effect without indicating when or if they will be withdrawn.”
The Biden administration has so far diverted questions about tariffs, saying it is conducting a “top-down review” of China’s trade policy. The White House has indicated that tackling forced labor, promoting workers’ rights and protecting the environment are some of its top business priorities.
Politically, rushing to eliminate tariffs could be risky before the midterm elections of the 2022 Congress, when any sign of softness in China could weaken Democrats at the polls.
Pressure on China’s trade policy is falling on Katherine Tai, the US trade representative. The Biden administration’s top trade negotiator immediately began making diplomatic calls to foreign counterparts when she joined the White House in March, but did not talk to China until last week.
U.S. lawmakers have repeatedly questioned Tai about China’s tariffs and cited the damage to its local industries. Senators have tried to resurrect the exclusion process and allow some Chinese imports to avoid extra punitive duties.
Some tariffs on Chinese imports were removed when Trump attacked his “phase 1“Trade agreement, in which Beijing pledged to buy $ 200 billion more in goods and services in the U.S. during the two years ending 2021. The Biden administration has so far said little about how it sees accession from China to the agreement and has not suggested whether it plans to start talks for a “phase 2”.
“USTR has never publicly issued any verdict on China’s performance in any detail,” said Scott Kennedy, a Chinese expert at the Washington Center for Strategic and International Studies. “This is supposed to be evaluated regularly… We should have heard if China still deserves love.”
In statements, Tai said his goal was to move forward on a “worker-centered trade policy.” Recently, the administration acted against a Chinese fishing fleet that claimed it was using forced labor on its vessels, blocking the company’s tuna and swordfish imports.
“Within the administration, they seem to be much more advanced in their discussions on human rights and labor rights than on the economic and trade agenda,” said a former government official linked to the American business community.
“There’s a growing feeling that these experienced people don’t know what to do with China: that, for all their frustrations with Trump, they didn’t come to office with a plan other than spending a lot of money nationwide to increase competitiveness and now they are just trying to make time with an infinite number of internal reviews and studies, ”the person said.
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