Tuesday, October 5th, 2021
Tough course towards China
Washington is sticking to punitive tariffs for the time being
The two largest economies in the world have been fighting a bitter trade conflict since 2018. The administration of US President Biden also wants to adhere to the imposed punitive tariffs for the time being. In certain cases, however, exceptions should be possible.
In the trade conflict with China, the US continues to take a hard line. The US trade representative Katherine Tai announced “open talks” with Beijing about unfulfilled agreements. China has made commitments in favor of certain US industries, such as agriculture, “which we must enforce”. While the administration of President Joe Biden is holding on to the imposed punitive tariffs for the time being, there should be exceptions in certain cases.
A new procedure is to be started with which goods can be exempted from the punitive tariffs imposed on China under the previous government under Donald Trump, as Tai said in a speech at the think tank Center for Strategic and International Studies. Influential US business associations had asked the Biden government at the beginning of August to lower the punitive tariffs, as they are ultimately paid by importers and increase costs for US companies.
Fierce trade dispute since 2018
The two largest economies in the world have been fighting a bitter trade conflict since 2018 by imposing massive punitive tariffs on each other. In January 2020, both sides finally signed a partial agreement. In it, Beijing pledged to import more US goods and respect intellectual property. In return, the USA waived new punitive tariffs and lowered some of the existing tariffs. After taking office last January, Biden hired his trade representative Tai to review US trade policy with China.
In principle, he is sticking to a tough course with regard to China, which he considers to be the greatest geopolitical challenge for the USA. Tai stressed that the US government did not want to “inflame” the “trade tensions with China” any further. China’s “state-centered and non-market-conforming trade practices” would continue to cause “serious worries”. Washington will use the full range of existing tools and develop new tools to defend US economic interests against “harmful tactics and practices,” said Tai.
USA has little hope
The focus is on working with friendly economic powers to create fair and open markets. However, in view of the close economic ties with China, allies like Germany shy away from taking too hard a course on Beijing. In addition, the US has little hope that China will undertake extensive market economy reforms.
“Beijing is making it increasingly clear that it is reinforcing its authoritarian, state-centered approach,” said a US government official. “We recognize that China may just simply not change and that we need a strategy that deals with China as it is, not how we want it to be.”