US tariffs review of over US$300 billion worth of Chinese imports almost done, says top trade envoy

Biden administration ‘taking a serious look’ at existing tools to deal effectively with Beijing’s policies causing ‘dependencies and vulnerabilities’
US lawmakers also raise questions about withdrawal of Trump-era demands on digital trade rules, fearing reversal means victory for China

US-China relations

Khushboo Razdanin Washington

Published: 4:00am, 17 Apr 2024

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Washington’s top trade envoy assured sceptical Republican lawmakers on Tuesday that the long-awaited results of the Biden administration’s review of US tariffs on more than US$300 billion worth of Chinese imports were “very close to the conclusion”.

Testifying before the House Ways and Means committee, US Trade Representative Katherine Tai described the 2½ years of review as “tremendously consequential”, a “whole-of-government” exercise looking at the use of tariff tools to address “inequities in the US-China trade relationship”.

“We are making progress and it is my belief that we are very close to the conclusion of this review,” Tai said when asked by Republican congressman Jason Smith of Missouri, the committee’s chairman, if she could commit to releasing the results by May 3.

Smith suggested that the elapsed time raised serious concerns about whether President Joe Biden recognised the urgency of the threat China posed to American workers and businesses.

Tai said the Biden administration was “taking a serious look” at the “existing tools” to deal effectively with China’s policies causing “dependencies and vulnerabilities in multiple sectors, harming American workers and businesses and creating real risks for our supply chains”.

The tariffs were put in place in 2018 by Donald Trump, Biden’s predecessor and the presumptive Republican nominee for the coming US presidential election. Smith on Tuesday said perhaps it was time for the Biden administration to “just admit” that Trump did “something right”.

Reiterating that the US sought competition rather than conflict with China, Tai told the lawmakers she was closely reviewing a plea from five US unions to investigate Beijing’s allegedly unfair acts, policies and practices in the critical maritime, logistics and shipbuilding sector.

The hearing took place a week after US Treasury Secretary Janet Yellen warned Beijing against Chinese “overcapacity” in electric vehicles and solar panels.

China’s patent applications being sped up, scrutinised to boost key industries

Also on Tuesday, Yellen hosted senior Chinese officials at her office in Washington as part of Biden’s efforts to bolster communication between the world’s two largest economies to manage competition responsibly.

The US delegation continued to express concerns about China’s “non-market practices and industrial overcapacity”, according to her office.

Tai at the House hearing was questioned about a number of other China-related topics including the administration’s withdrawal of Trump-era demands on digital trade rules.

For several years Washington was a leading advocate of strong digital trade rules to protect cross-border data flows, prohibit forced data localisation as well as give access to source code as conditions of doing business in a foreign country.

But in October the Office of the US Trade Representative withdrew the demands in multiple settings, including the World Trade Organization and the Indo-Pacific Economic Framework for Prosperity, a US-led group of 14 Asia-Pacific economies that aims to promote trade resilience and a sustainable digital economy.

The US House of Representatives’ recently passed legislation forcing Beijing-based tech firm ByteDance to divest TikTok reflects widespread American political suspicion towards China, its businesses and its policies. Photo: AP

The reversal has angered some US lawmakers and business interests, who say the decision will expose American companies to discrimination, malicious cyberactivity and intellectual property theft, handing a victory to countries like China.

On Tuesday, Republican congressman Darin LaHood Illinois, co-chair of the House digital trade caucus, said that rather than “providing a free-market alternative” to the Chinese Communist Party’s policy of censorship and surveillance, Biden was sending “mixed signals” on the global stage by walking back rules accepted by Republicans and Democrats.

However, invoking the example of the beleaguered social media platform TikTok – owned by Beijing-based tech firm ByteDance – Tai insisted that the government’s approach to digital trade was aimed at giving Congress more room to regulate big tech firms and protect Americans’ data.

The administration took notice of the fact that legislation had advanced through the House relating to TikTok and of concerns around transfers of Americans’ data to China, she added.

“We are adjusting our approach and policies on what we call digital trade because we see what you are doing up here with respect to addressing the risks and harms that can come from PRC technology policies and how they impact the rights and the interests of Americans and, for example, their data,” Tai said of lawmakers’ efforts on Capitol Hill.

US must treat China more like a cold-war opponent: Republican policymakers

Such assurances have failed to satisfy many in the US business community.

In a letter to the White House on Monday, 40 major business groups claiming together to represent every sector of the American economy called on the White House to “reassert its leadership in digital trade” and act against “damaging” trade barriers in foreign countries.

“We’re concerned that the administration is taking a laissez-faire approach to the foreign-trade barriers that often shut US goods and services out of markets abroad”, said John Murphy of the US Chamber of Commerce at a press briefing on Monday.

Foreign governments may see the change in stance on digital trade as a “green light” to raise barriers for American firms, Murphy added.

Digital trade generates more than half of US exports of traded services, according to the Information Technology Industry Council, a group representing American IT companies.