Hawks and doves both had high hopes for U.S. Trade Representative Katherine Tai’s long-awaited speech Monday on the Biden administration’s China trade agenda. Both were disappointed. The most likely outcome over the next year remains a continuation of the status quo: a frozen conflict.
While the U.S. Trade Representative didn’t announce any new tariffs or investigations, she left the door open, saying that the administration intended to enforce the Phase One trade deal negotiated under President Trump. Ms. Tai also, however, also made no mention of scrapping existing tariffs. She did announce a new tariff exclusions process whereby U.S. businesses can apply to skip paying levies in areas where the tariffs are deemed too damaging. Similar processes existed under the Trump administration but expired under Mr. Biden’s.
While the Biden administration will doubtlessly take heat from both sides for being insufficiently ideological, Ms. Tai’s approach makes a certain amount of sense. Arguably the most effective trade action the U.S. could take to bolster its position against China—rejoining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) free-trade agreement that Mr. Trump abandoned—appears politically out of reach in the current U.S. Congress. Standing pat now buys time to smooth U.S. allies’ ruffled feathers and eventually coordinate a more effective approach without adding further to inflationary forces that threaten to undermine Mr. Biden’s presidency ahead of the 2022 midterms. By keeping the existing tariffs in place, the administration also defuses politically poisonous accusations of being soft on China while preserving leverage for future negotiations.
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