The U.S. Trade Representative announced on Wednesday that it will renew 352 of 549 exclusions to tariffs originally issued by the Trump administration.
After President Biden was sworn into office in January 2021, one of the things many in the political punditry predicted was that he would quickly remove tariffs that had been placed on around $350 billion worth of goods imported from China.
After all, Biden quickly put an end to a whole bunch of Trump-era policies. Why wouldn’t he also remove the tariffs?
Only that didn’t happen. Instead, the Biden administration quite rightly opted to keep the tariffs in place, and officials were clear about the reason: China’s government hadn’t actually done anything to deserve to have the tariffs removed.
Not only had China failed to meet basic requirements in the 2020 “Phase 1” trade agreement — a deal that was completely inadequate to begin with — Xi Jinping and other Chinese Communist Party (CCP) leaders did nothing to address the litany of their government’s other unfair trade practices, from the market participation of state-owned enterprises to mass subsidies to lax labor and environmental laws.
Indeed, it’s only become clearer that Chinese supply chains are using forced labor to make products for Western brands, which prompted Congress to ban imports from the Xinjiang region altogether. Meanwhile, there is growing recognition that the United States needs to become less reliant on China for critical goods, especially since China cut off supplies during the COVID-19 pandemic and now is likely sending aid to Russia to help it weather global sanctions put in place because of that country’s invasion of neighboring Ukraine.
All of China’s bad behavior still hasn’t stopped importers from howling for an end to the tariffs. On Wednesday, the Biden administration offered them a concession, reinstating 352 of 549 tariff exclusions that had been previously granted.
It’s a strategic mistake. A small mistake, but still — a mistake.
The United States needs to stop putting any kind of policy in place that rewards the CCP, and making it easier for China to export goods to the United States does just that. The problems that led to the tariffs being put into effect in the first place remain — and now there are a whole bunch of new problems, like China’s support of Russia and increased concerns about its aggression toward Taiwan. Instead of issuing exclusions to the tariffs, which erode both their effectiveness and weaken U.S. negotiating leverage, the United States should keep strong trade enforcement measures in place while working with our allies to confront Beijing.
Second, the U.S. government shouldn’t reward importers who have been calling for an end to the tariffs. Rather than find alternative production locations — including in the United States! — these companies hired a bunch of lobbyists and tried to dial U.S. policy back so that trade with China would be nice and lucrative.
American corporations, multinational companies, retailers and others who have relied on China for artificially cheap imports want to go back to how the world once was, when China served as the world’s sweatshop. But the world is different.
China is a strategic economic competitor and already is ahead of the United States when it comes to sectors like clean energy and electric vehicles. We need to invest in our own industries while also enforcing our trade laws and standing up for our own workers and manufacturers, and we need to do it right now. If we don’t do this we’ll only become more reliant on China, and China wins the 21st century. Full stop.
Congressional leaders are now working to advance the Bipartisan Innovation Act, which would invest in critical production like semiconductors (and hopefully include new trade tools to help American workers and companies compete globally). Versions of the bill have passed both the Senate and the House; Congress should get this done.
But investment and trade enforcement are connected, and there is a connection to tariff exclusions in the legislation. In the Senate version of that bill, there’s very flawed language that would mandate that the U.S. Trade Representative (USTR) reinstate all exemptions and exclusions to the tariffs through the end of 2022. If it’s included, it will give the CCP an even bigger free pass in the very bill that is designed to counter China’s predatory economic and trade policies.
Needless to say, lawmakers should remove this language, especially since USTR has issued its determination on these exclusions. We may not agree with the decision to extend exclusions, but it is in USTR’s purview to make these types of calls. Congress shouldn’t get into the business of trying to make them itself.
All of this brings us to the growing recognition that the United States needs to strengthen its critical manufacturing capabilities and reshore supply chains. Part of that lies with making the right types of investments (and a whole lot of them). But the United States also needs to be willing to enforce its trade laws. And that includes the judicious use of tariffs.
Despite reinstating hundreds of these exclusions, the Biden administration made the right move in keeping the overall tariffs in place. Now it should undertake serious exploration of trade enforcement measures to ensure the CCP will not continue to be rewarded for its unfair trade practices and human rights violations.
And when these new exclusions expire at the end of the year, the Biden administration should let them expire for good.