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October 12, 2021

Biden Administration Announces China Tariffs To Stay In Place While U.S. Pursues Negotiations

Last week, U.S. Trade Representative (USTR) Katherine Tai announced that U.S. tariffs on Chinese products, including the Section 232 steel and aluminum tariffs that have been imposed on China and other countries, will stay in place for now.

In remarks at the Center for Strategic and International Studies, Tai took a relatively forceful stance again China. She said, “For too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world. To be successful, we must be direct and honest about the challenges we face and the grave risk from leaving them unaddressed.”

Tai outlined the Biden administration’s policy moving forward. She said the United States will reopen talks with China over its failure to comply with the trade deal the United States and China signed during Trump administration. (Tai is expected to meet with her Chinese counterpart in the coming days to outline U.S. concerns.)

Tai also indicated the United States would restart a process for U.S. companies to win exemptions from some of the tariffs on Chinese products. Indeed, the next day, the Biden administration did just that. On October 5, 2021, the USTR opened comments regarding whether 549 previously extended exclusions that had expired should be reinstated. The notice outlined the criteria by which USTR will evaluate any decision to reinstate the exclusions, including:

  • Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries;
  • Any changes in the global supply chain since September 2018 with respect to the particular product or any other relevant industry developments;
  • Efforts, if any, that importers or U.S. purchasers have undertaken since September 2018 to source the product from the United States or third countries; and
  • Domestic capacity for producing the product in the United States.

Click here to read the announcement from USTR and here to find more information from the law firm Venable, LLP. The comment period on the exclusion process is open until December 1, 2021.

In last week’s remarks, Tai also indicated that the Biden administration will raise broader concerns about China’s “state-centered and non-market trade practices,” including its industrial policies and industrial overcapacity. Tai stressed that her office plans to use a full range of new and existing tools to defend U.S. economic interests. (She did not specify what those tools would be.)

MSCI members can read more about the Biden administration’s plans for trade with China in this White House fact sheet and in the transcript of a call explaining the policy.

In addition to these specific actions regarding China, Tai reiterated the Biden administration’s focus on a worker-centric trade policy, stressing that an approach to compete with China will include strengthening the U.S. manufacturing base, investing in research and development and clean energy, and encouraging companies to buy U.S.-made products. (MSCI is merely reporting on the content of Tai’s remarks. As a reminder, as a North American trade association, MSCI opposes so-called “Buy America” policies.)

Meanwhile, in related news, according to Reuters, U.S. Commerce Secretary Gina Raimondo said protecting the U.S. steel industry is a “national security issue.” Secretary Raimondo, who has said before that China doesn’t play by the rules and needs to be held accountable, wants to increase market access for U.S. companies in China and once COVID-19 restrictions ease up, plans to will travel there with U.S. CEOs.

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