Washington (dpa) – In the trade war with China, the US government of President Joe Biden wants to adhere to the punitive tariffs imposed on Beijing, but allow more exceptions in favor of the US economy.
High-ranking officials in the Biden government announced that a process would be restarted whereby US companies could apply for exemption from punitive tariffs on imports from China in certain cases. US business representatives had urged this in view of the cost increases caused by the tariffs. In addition, the US trade representative Katherine Tai wants to resume direct talks with Beijing soon and enforce that China adhere to its promises from the joint “phase one agreement”, it said.
Tai wants present the new strategy in the trade conflict with China in a speech at a think tank in Washington. According to its own statements, the Biden government wants to maintain a tough course towards Beijing, but to proceed in a more differentiated and coordinated manner than the previous government under Donald Trump. Government officials criticized their approach as being chaotic and unpredictable and damaging parts of the US economy.
The aim is not to escalate trade tensions with China, they said. The US government will, however – if necessary – use the full range of instruments to enforce the interests of the US, its economy and its workers. When asked whether, in case of doubt, new punitive tariffs were also conceivable, it was said: “We do not want to take any options off the table.”
The trade war between the two largest economies began in mid-June 2018: The then US President Trump started the conflict with punitive tariffs on imports from China amounting to 50 billion US dollars. He wanted to cut the trade deficit with China and accused Beijing of unfair trade practices. The conflict escalated until a year later Trump imposed punitive tariffs on almost all imports from China worth more than 500 billion US dollars – more than Beijing was able to answer with counter-tariffs.
The decline in the flow of goods and the uncertainties caused by the trade war had also dampened global growth. In January 2020, just as the corona pandemic began in China, both sides then agreed on at least a partial agreement in their conflict. The core of the so-called phase one agreement was China’s promise to buy 2020 billion US dollars more goods in the US by the end of 2021 – especially oil and Gas (50 billion), industrial goods (80 billion) and agricultural products (32 Billions).
The US government officials complained that the Chinese government had failed to keep commitments from the agreement. Tai will openly address this to the Chinese government. In the agreement, clear mechanisms for enforcing the requirements were agreed, they said and emphasized: “We are ready to take steps if the talks do not bring the desired results.”
Biden’s government admits China a prominent position in its foreign policy: The US president regards the second largest economy in the world as the most powerful competitor and geopolitical challenge number one. After taking office, the Democrat initially did not touch the trade agreement with China and the punitive tariffs against Beijing, but instead ordered a comprehensive review of trade policy towards China. It is now completed.
It is the most important bilateral trade relationship in the world, it said from the US government. Therefore, one took the time for a detailed consideration. The new government is pursuing a balanced approach – with more attention to long-term consequences and with close coordination with international partners. In addition, the government under Biden considers not only trade and tariffs, but all aspects of economic relations with China. This includes making US companies more competitive or supply chains more independent of China through targeted investments.
Overall, the approach towards China must be flexible and agile, the US government officials said. One will see how China takes Tai’s speech and then reacts accordingly.