In the trade war with China, the U.S. administration of President Joe Biden wants to maintain the punitive tariffs imposed on Beijing, but allow more exemptions in favor of the U.S. economy. Senior Biden administration officials announced a process would be restarted in which U.S. companies could apply to be exempt from punitive tariffs on imports from China in certain cases. U.S. business representatives had urged this in light of cost increases from the tariffs. In addition, U.S. Trade Representative Katherine Tai wanted to resume direct talks with Beijing soon and enforce that China abide by its commitments under the joint "phase one" agreement, they said.
Tai planned to outline the new strategy in the trade conflict with China in a speech at a think tank (think tank) in Washington this Monday (16:00 CET). According to its own statements, the Biden administration wants to maintain a tough course overall vis-à-vis Beijing, but take a more differentiated and coordinated approach than the previous administration under Donald Trump. The latter's approach had been chaotic and unpredictable in parts and had hurt parts of the U.S. economy, administration officials criticized.
The goal is not to escalate trade tensions with China, they said. However, they said, the U.S. government will use the full range of tools - if necessary - to enforce the interests of the United States, its economy and its workers. Asked if new punitive tariffs were also a possibility in case of doubt, they said, "We don't want to take any options off the table."
The trade war between the two largest economies had begun in mid-June 2018: with punitive tariffs on imports from China in the amount of 50 billion U.S. dollars, then U.S. President Trump started the conflict. He wanted to reduce the trade deficit with China and accused Beijing of unfair trade practices. The conflict escalated until, a year later, Trump had imposed punitive tariffs on almost all imports from China worth more than 500 billion US dollars - more than Beijing could respond to with counter tariffs.
The decline in the flow of goods and uncertainties due to the trade war had also dampened global growth. Then in January 2020, just as the Corona pandemic was beginning in China, the two sides reached at least a partial agreement in their conflict. At the heart of the so-called phase-one agreement was China's promise to buy more goods from the U.S. for $200 billion by the end of 2021 - primarily oil and gas ($50 billion), industrial goods ($80 billion) and agricultural products ($32 billion).
U.S. government officials complained that the Chinese government had not honored commitments under the agreement. They said Tai would raise this openly with China's government. Clear enforcement mechanisms were agreed upon in the agreement, they said, stressing, "We are prepared to take steps if the talks do not produce the desired results."
Biden's administration gives China a prominent position in its foreign policy: The U.S. president views the world's second-largest economy as his most powerful competitor and number one geopolitical challenge. However, the Democrat initially did not touch the trade agreement with China and the punitive tariffs against Beijing after taking office, but ordered a comprehensive review of trade policy toward China. This has now been completed.
This is the most important bilateral trade relationship in the world, according to the U.S. government. That's why they took the time to look at it in detail. The new administration is taking a balanced approach - with more consideration for long-term consequences and close coordination with international partners. Moreover, the Biden administration is looking not just at trade and tariffs, but at all aspects of economic relations with China. This includes making U.S. companies more competitive or supply chains less dependent on China through targeted investments, he said.Overall, the approach to China must be flexible and agile, U.S. officials said. They said they would see how China received Tai's speech and then respond accordingly.
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