Businesses push US President Joe Biden to develop China trade policy

The New York Times
Washington, United StatesWritten By: Alan Rappeport © 2021 The New York TimesUpdated: Sep 02, 2021, 05:47 PM IST

The IMF chief warned of risks to the global economy from the rivalry between China and the United States Photograph:(Reuters)

Story highlights

US import duties still exist on roughly $360 billion worth of Chinese goods, and almost all of the exemptions that shielded more than 2,000 products from those tariffs have expired

More than seven months into the Biden administration, American businesses say they are growing increasingly frustrated by the White House’s approach to China, with confrontational policies imposed during the Trump era still in place and President Joe Biden offering little clarity about economic engagement with the world’s second-largest economy.

The relationship between the two economic superpowers remains deeply fractured. US import duties still exist on roughly $360 billion worth of Chinese goods, and almost all of the exemptions that shielded more than 2,000 products from those tariffs have expired. A thicket of export controls and bans are still in place, leaving US technology giants such as Qualcomm, Intel and Google in the lurch over how to approach the Chinese market and offering little hope that the decoupling of the world’s two largest economies will be reversed anytime soon.

To the dismay of some American business leaders, Biden has amplified some of the Trump administration’s punitive moves. In July, the Biden administration expanded the list of Chinese officials under sanctions by the United States for their role in undermining Hong Kong’s democratic institutions. In June, the president issued an executive order adding more Chinese companies to a prohibition on US investments in Chinese firms that have links to the country’s military or that sell surveillance technology used to repress dissent or religious minorities.

Yet Biden and his top advisers have yet to elucidate how they view economic relations with Beijing, saying they will make the administration’s approach known once a broad review of China trade policy concludes. But the review has stretched on for months with no public timeline for its conclusion.

As a result, businesses are lobbying heavily for the tariffs to be removed, which would make it easier for them to rely on factories in China instead of making investments in the United States or elsewhere. And they want assurances that they can do business with a financially important market.

“There has been frustration for the business community at the lack of concrete China economic policy,” said Charles Freeman, senior vice president for Asia at the US Chamber of Commerce. “It’s not as if this crowd came in without any experience or any preconceived thinking about China.”

The future of the US trade relationship with China is one of the biggest global economic questions confronting Biden and his advisers. China has thrown huge resources behind its economic ambitions and plans to dominate cutting-edge industries like artificial intelligence and robotics by providing government subsidies to Chinese firms and using other tactics, including espionage. While the Trump administration signed an initial trade deal with China that included purchase commitments for agricultural and other goods, the agreement failed to address a number of major concerns, including China’s state-owned enterprises and industrial subsidies.

During his White House bid, Biden assailed President Donald Trump over his trade war and promised to enlist allies to counter China over its trade practices. Since taking office, Biden has resolved a long-standing trade spat with the European Union and persuaded European officials to adopt a more assertive trade policy toward China this year. And he has pitched his infrastructure plan as a way to counter Beijing, saying it would “put us in a position to win the global competition with China in the upcoming years.”

But the administration has said little about whether it intends to restart economic talks and address outstanding issues, including tariffs. At times, officials have offered somewhat discordant views.

Treasury Secretary Janet Yellen told The New York Times this summer that tariffs had harmed US consumers, but she has also warned that Chinese subsidies for exporters pose a challenge for the United States. The US trade representative, Katherine Tai, has described the tariffs as providing leverage.

Asked Wednesday about the administration’s review of the tariffs, Jen Psaki, the White House press secretary, said, “I don’t have any timeline for you on when that review will be completed.”

Business impatience with the administration’s approach is mounting. Corporate leaders say they need clarity about whether American companies will be able to do business with China, which is one of the biggest and fastest-growing markets. Business groups say their members are being put at a competitive disadvantage by the tariffs, which have raised costs for US importers.

“We should be doing everything we can to increase China’s use and dependence on American technology products,” Patrick Gelsinger, chief executive of Intel, said in an interview last week. The administration is “struggling to lay out a framework for how they have a policy-driven engagement with China,” he said.

“To me, just saying, ‘Let’s be tough on China,’ that’s not a policy, that’s a campaign slogan,” he added. “It’s time to get to the real work of having a real policy of trade relationships and engagement around business exports and technology with China.”

In early August, a group of influential US business groups sent a letter to Yellen and Tai urging the administration to restart trade talks with China and cut tariffs on imported Chinese goods.

“The main kind of dilemma that companies face right now is just uncertainty,” said Craig Allen, president of the US-China Business Council, which organized the letter. “Will the tariffs remain in place? Are they in place in perpetuity? What is the exclusion process to request an exemption from the tariffs? Nobody knows.”

Allen said his group had organized the letter because it wanted to make sure that businesses’ views, in addition to those of labor and environmental groups, would be taken into account during the Biden administration’s China review.

“Many find it ironic that the Biden administration is following so closely the playbook laid down by the Trump administration on China,” he said.

Other organizations that signed the letter included the US Chamber of Commerce and the Business Roundtable as well as groups representing sectors of the economy with close business ties to China, such as the Pharmaceutical Research and Manufacturers of America, the Semiconductor Industry Association and the American Farm Bureau Federation.

“We’re now dealing with all these other supply chain disruption issues that are costing companies millions of dollars,” said Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation, which also signed the letter and represents a sector that has become heavily dependent on imports from China. “To have the tariffs on top of that is difficult for planning purposes.”

Business groups are not uniformly in favor of lifting tariffs. The National Council of Textile Organizations, which represents the US textile industry, wants the administration to keep tariffs on finished apparel and home textile products from China.

“We have been pretty strong in our message to the administration saying please continue this approach on getting tough on China,” said Kimberly Glas, the textile group’s president and chief executive.

Any decision on rolling back tariffs could also have domestic political implications in the United States, where a tough-on-China mentality has permeated both major parties. Any steps by the Biden administration to roll back Trump-era policies toward Beijing could be seized on by political opponents seeking to paint Biden as insufficiently tough on China at a time when the country is engaged in a rapid military buildup.

When asked about the administration’s review of China trade policy, Tai has responded by saying she was aware that “time is of the essence.” However, she has refrained from offering a preview of what steps the administration may seek to take.

“In terms of how we need to approach this trade relationship,” Tai said at a virtual event last week, “we need to approach it with deliberation.”