March 1, 2021

Where Is The Biden Administration Likely To Head On China Trade Policy?

The U.S. Senate Committee on Finance held a hearing last week on the nomination of Katherine Tai, President Joe Biden’s choice to be U.S. Trade Representative. According to CNBC, Tai argued that tariffs were a “legitimate tool” to combat unfair trading practices carried out by the Chinese government. Tai did not discuss possible new tariffs on China, however, focusing instead on outlining how China needed to live up to its commitments under the Phase 1 trade deal it signed with the United States in early 2020. (Click here for information about that agreement.)

Broadly, when it comes to China, Tai said, “China is simultaneously a rival, a trade partner, and an outsized player whose cooperation we’ll also need to address certain global challenges. We must remember how to walk, chew gum and play chess at the same time.”

CNBC also noted Tai “did not reject Trump’s ‘America First’ trade policies, but said she would revamp them to a ‘worker-centric’ trade model that aimed to safeguard American livelihoods through investment and trade enforcement.” While Tai did not give a definitive answer about how the Biden administration plans to handle former President Donald Trump’s Section 232 tariffs, she did discuss the problem of global overcapacity in general.

Specifically, according to S&P Global Platts Tai said, “Tariffs are a very important part of our fair-trade remedies, having said that, I think with respect to the Section 232 tariffs on steel and aluminum, we have to acknowledge we have overall a very significant global marketplace problem in the steel and aluminum markets that are driven primarily by China’s overcapacity that it’s built in production of these materials.” Tai added, “But it’s not just a China problem.”