In Speech on China, USTR Tai Says the Biden Administration Plans to “Protect American Economic Interests”

By Stockton Grunewald
Oct 04 2021 |

Tai cites the American steel and solar industries as examples of those that have suffered because of the actions of China’s government.

U.S. Trade Representative Katherine Tai addressed the Center for Strategic and International Studies (CSIS) on Monday, highlighting the Biden administration’s worker-centric trade policy and renewed efforts at combating China’s unfair trade practices.

And while Tai pledged a “holistic and pragmatic” approach to U.S. relations with China, she also made clear that Team Biden plans to continue a tough approach with China’s government, including maintaining tariffs on Chinese imports and pursuing additional ways to stand up for American workers and companies.

“In recent years, Beijing has doubled down on its state-centered economic system,” Tai said. “It is clear that China’s plans do not include meaningful reforms to address the concerns shared by the United States and many other countries.”

Following a “comprehensive review” of U.S.-China trade policy, the Biden White House decided on pursuing a four-pronged plan to guide future U.S. action and promote domestic production and manufacturing, Tai said.

First and foremost, the U.S. intends to hold China accountable for its commitments in the “Phase 1” trade deal negotiated by the Trump administration and put into place just before the onset of the coronavirus pandemic in spring 2020. Studies have shown China has not met its goals for purchasing U.S. goods, making an already disappointing deal even worse.

Second, the U.S. will start a targeted tariff exclusion process on Chinese imports but will not lift them entirely. “We will ensure that the existing enforcement structure optimally serves our economic interest. We will keep open the potential for additional exclusion processes, as warranted,” Tai said.

Third, the U.S. will pursue discussions not addressed in Phase 1, and “use a full range of tools and develop new tools to protect American economic interests,” Tai noted.

Finally, the Biden administration hopes that these moves will facilitate a “race to the top for market economies and democracies,” that will encourage other trading partners to adopt similar remedies.  

United Steelworkers International President Tom Conway applauded Tai’s speech in a statement, noting that the U.S. “must have a steady approach to confronting the Chinese government’s predatory and protectionist policies.”

“China’s leaders have yet to meet the commitments of the Trump administration’s Phase One trade deal, and Tai made it clear that enforcing this deal is her first priority,” Conway said. “As such, the Biden administration will maintain the tariffs that China’s leaders accepted as part of this agreement and will not unilaterally disarm as China’s trade policies continue to undermine global markets and the jobs and livelihood of workers here in the United States.”

Tai also outlined the “need to show that trade policy can be a force for good in the lives of everyday people.”

In recent years, political discussion around trade deals have become synonymous with outsourcing of American jobs. China’s mercantilist trade practices have become a prime fixation of commentators and lawmakers alike, and not without good reason, Tai was quick to note.

“Let’s look at the steel industry. In 2000, there were more than 100 U.S. steel companies. We produced 100,000,000 metric tons of steel annually, and the industry employed 136,000 employees across the country… low-priced Chinese steel flooded the global market, driving out business in the U.S., and around the world. Every steel plant that shuddered left hundreds without livelihoods, It also left communities reeling, as small business dependent on plants also closed their doors,” Tai said.

“Today, China produces 1,000,000,000 metric tons of steel and accounts for 60% of world production. China produces more steel in a month than what the U.S. does in a year. Employment in the American steel industry has dropped 40% since 2000.”

Conway noted that Tai’s “focus on steel reflects the Biden administration’s recognition of how critical the sector and its workforce are to our nation.”

“A sound plan for addressing our trade relationship with China will enable us to invest in America’s future and build back better,” he added.

It’s not just steel, of course. In other sectors of the economy, including those crucial to President Biden’s goals of a carbon neutral future, such as solar manufacturing, China’s unfair trade practices continue to hamper U.S. goals, Tai pointed out.

“As China built out its own industry, our companies were forced to close their doors… large parts of the solar supply chain don’t even exist in the United States,” Tai said. 

While standing up to China’s unfair trade practices is vital, the United States also must invest in itself to ensure it can compete on the global stage. Tai touted the effects of the American Recue Plan, and urged passage of the Bipartisan Infrastructure Deal and the ongoing negotiations around the “Build Back Better” agenda as the principal means in priming the domestic economy for foreign competition.

“We have to make smart, domestic investments, strengthen our manufacturing base, and incentivize companies to buy American up and down the supply chain,” Tai said.

The administration hopes to differentiate itself from previous incarnations of U.S.-China trade agreements by pursuing a multilateral approach, abandoning go it alone rhetoric.

“These [Chinese] policies have reinforced a zero-sum dynamic in the world economy, where China’s growth and prosperity come at the expense of workers in the U.S., and other democratic economies,” Tai explained. “That is why we need to take a new, holistic, and pragmatic approach to our relationship with China… for the near term, and the long term.” 

When pressed by the moderator and audience about enforcement mechanisms outside of tariffs, Tai reassured the audience that U.S. government officials were saying the same things to PRC officials.

“I intend to have frank discussion with my counterpart in China,” Tai assured one questioner. “Our objective is not to enflame trade relations…but above all else, we must defend to the hilt our economic interests… we must chart a new course to change the trajectory of our bilateral trade dynamic.” 

Tai ended her speech with confidence of America’s role as a trading partner, arguing that, “there is a future in which all of us in the global economy can grow and succeed. Where prosperity is inclusive within our own borders, and across those borders, too.”