Biden campaigned against the trade war with China, but ending it is complicated

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President Biden, after a meeting with the House Democratic caucus last week. Countering China is one of his top issues, but he hasn’t said what he plans to do about Trump-era tariffs yet.

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A U.S. flag flies near containers stacked high on a cargo ship at the Port of Los Angeles in this file photo.

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«We were never in favor of these tariffs. We thought they imposed a tax on American consumers and, of course, American manufacturers,» said Myron Brilliant, head of the international affairs division at the U.S. Chamber of Commerce. «But we think it’s probably not realistic in the context of where the U.S.-China relations sit today to see all the tariffs removed at one time.»

Economists have largely panned the tariffs, too. A recent paper from the National Bureau of Economic Research confirmed that «U.S. consumers of imported goods have borne the brunt of the tariffs through higher prices.» And critics say this is even more of a challenge at a time of high inflation.

But Chad Bown, a senior fellow at the Peterson Institute for International Economics in Washington, said economic arguments don’t carry much weight in what is essentially a political argument.

«Arguing the merits of economic costs is sort of like shouting at windmills because it’s not only about economic costs and efficiency anymore, it’s about national security. It’s about supply chain resilience and public health,» Bown said.

«I’ve sort of accepted that politically [tariffs] may be impossible to get rid of. There’s no going back,» said Bown, adding he hopes the Biden administration may look at a more judicious use of tariffs, if it decides to continue using them.

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In 2020, China came up more than 40% short of reaching the annual legal commitment.

(It reached 59% of the commitment using US export statistics, and only 58% of the commitment using Chinese import statistics. The legal text says to evaluate relying on both trade statistics) pic.twitter.com/qvH1HtcLbx

— Chad P. Bown (@ChadBown) October 1, 2021

Trump strategy failed to change Chinese practices

Critics also complain the Trump strategy has failed to change Chinese trade practices. Under the Phase One deal, which is set to expire at the end of 2021, China pledged to purchase an additional $200 billion of U.S. exports. But it has so far fallen about 30% to 40% short of that promise, said Bown, who has been tracking the results of the deal.

«Even with the Phase One agreement, China did not commit to make tremendous amounts of change of the kinds that we’re worried about with its economy, state-owned enterprises, its economic system,» said Bown. «I just don’t think that the United States going at it alone through tariffs is going to induce that kind of change.»

The deal also did not address one of the thorniest issues: subsidies. «The single biggest complaint that the United States has about what China has done is that it’s captured all of this market share and created these huge, huge companies on the backs of government subsidies that are provided to Chinese companies,» said Jennifer Hillman, a senior fellow for trade and international political economy at the Council on Foreign Relations.

A big question for Biden is whether he lets the Phase One deal expire at the end of the year, or whether he tries to renegotiate it. Another complicating factor: the Biden administration’s desire to work with China on climate. «China has made it very clear … if you want cooperation on climate change, we want you to lift the tariffs or we want more cooperation on tariffs,» Hillman said.

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U.S. Trade Representative Katherine Tai, left, and Secretary of State Antony Blinken met with European counterparts last week on trade and technology issues in Pittsburgh.

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During the G-7 summit earlier this year, Biden pushed his European counterparts to adopt a tougher stance with China and single out Beijing for its «non-market economic practices.»

But some countries remain cautious. Shaw, who joined law firm Hogan Lovells after she left the Trump administration, said the idea of working with Western allies to collectively combat China is only effective if the allies go along with the solution too.

«What we’ve seen more often than not is while they may be with us in terms of the substance of the issues, they’ve made their own calculated decision that they don’t want to come out as strong against China,» said Shaw.

And yet some say that’s precisely because of the unilateral tariff actions the United States took.

«The Phase One deal and these tariffs are in so many ways pushing away our allies and our partners at the time when we need them most,» said Hillman, who also previously served as a judge in the World Trade Organization.

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Chinese President Xi Jinping arrives at a reception in Beijing in this file photo from September.

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American attitudes have also shifted. Polling from the Pew Research Center finds that more than three quarters of Americans have an unfavorable view of China.

«That negative perception of China among the American public has really shot up in the last few years,» said Anna Ashton, vice president of government affairs at the U.S.-China Business Council, a trade association representing American companies that do business with China. «I don’t think that there is popular tolerance for going back to just the way it used to be.»

Being tough on China is now a widely accepted bipartisan stance. Earlier this year, the Senate — in a rare moment of bipartisanship — passed a bill that would invest $250 billion in science and technology aimed at boosting U.S. competition with China.

Experts say rolling back tariffs could be interpreted as being weak on Beijing.

«I do think that politically it will be very difficult for the Biden administration to remove any tariffs without meaningful concessions from China,» Shaw said.

• Tariffs
• China