Biden’s Trade Policy with China

Biden’s Trade Policy with China

Several possibilities have been offered for how the Biden administration will shift U.S. trade policy including scrapping the Trump trade negotiations with China through executive order and working with Asian allies to pressure China.

Much of the Trump administration’s focus on China was conducted through two trade provisions: Section 301 and Section 232.

Section 301 is one of the main provisions Trump directed United States Trade Representative Robert Lighthizer to enact high tariffs on China.

A lengthy Section 301 investigation and report, “Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act of 1974,” highlights China’s unfair practices related to intellectual property and theft, access to propriety technology and software, and licensing to name a few of the many grievances.

Trump used the Section 301 report to implement the first sets of tariffs against China in 2018 on $50 billion worth of imports.

The Trump administration also levied steel and aluminum tariffs in 2018 that largely targeted China as well using a Section 232 investigation and report. Section 232 was put into law over concerns about trade and national security by President John F. Kennedy in 1962.

According to the Congressional Research Service, “While the United States has extensive antidumping and countervailing duties on Chinese steel imports to counter China’s unfair trade practices, steel industry and other experts argue that the magnitude of Chinese production acts to depress prices globally.”

The United States also negotiated exemptions with countries like Australia, Brazil, and South Korea. The Congressional Research Service notes that over 78,000 steel and aluminum tariff exemptions have been granted.

With the Biden inauguration a month out, is the clock running out on the Trump trade wars? Not really.

Biden recently said he isn’t planning on quickly reversing Chinese tariffs, ““I’m not going to make any immediate moves, and the same applies to the tariffs,” said Biden. “I’m not going to prejudice my options.” Whomever Biden ends up selecting as United States Trade Representative, they may be towing the Trump tariffs for the time being.

There’s speculation that Biden could pick Katherine Tai, chief trade lawyer for House Ways and Means Committee. Politico reported that Tai played a key role in the USMCA trade negotiations and is respected by business and labor. Tariffs against China may have been the most consistent policy pursued by the Trump administration and it is comical that Tai, one of the key negotiators for Trump’s USMCA deal, could be leading trade policy in the Biden White House.

Former Chicago Mayor Rahm Emanuel is also being considered, but is thought to be a much tougher sell for confirmation on both sides of the political aisle.

China has long been billed as the next contender to challenge American superpower hegemony. Recent skirmishes between two have ranged from demanding access to big technology encryption, to maritime and land claims in the South China Sea, and the expansive Belt Road Initiative infrastructure project to the United States’ aggressive posture against Chinese foreign investment and incursions by Chinese technology countries and bans on social media companies.

Much of Biden’s China strategy and pending trade action may be directly tied to Jeffrey Prescott. Prescott is a longtime aide to Biden and is expected to be the National Security Council’s China  director. Prescott is also a veteran of the Obama administration where he worked in a similar role on national security.

Biden will probably try and “repair” the United States relationship with China. Trump favored an aggressive, semi-isolationist approach that tried to ramp up intense global economic pressure on China. Biden will probably pursue a warmer relationship with President Xi Jinping that is closer to winning friends and influencing people than a poke in the eye.

Biden might not be Richard Nixon when it comes to China, but he will stray away from Trump’s aggressive policies.

Despite denials, many are calling Biden’s presidency a third term for the Obama administration. Biden has been filling his cabinet with Obama veterans, but we’ll have to wait and see if the Biden administration charts its own path when it comes to the U.S.-China relationship.

Evan Harris is the media relations and outreach manager for PRI.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.