White House debates to delay Biden’s plan for tariffs on key Chinese industries

The delay carries the risk that the Democrats will be pushed back even further before the midterm elections. Companies whose manufacturing costs have risen due to the tariffs had expected Biden to take back Trump’s trade wars. But Biden must also weigh these demands against his desire to appear tough on Beijing for an electorate increasingly concerned about China’s economic power, as well as his union supporters’ desire to maintain tariffs on key industries like steel.

“I have a lot of customers who are fed up with Trump and have voted for a moderate, business-friendly Biden,” said Brian Johnson, a director of the Vogel Group, a corporate lobbying firm. “How much these guidelines interfere with their results will affect their behavior.”

Trump’s trade legacy has remained largely unchanged since Biden took office 10 months ago: levies on $ 350 billion in Chinese goods are still in place. China also failed to adhere to an agreement signed with Trump in early 2020 to purchase US agricultural products and other goods worth $ 200 billion. In a speech in early October, Tai announced that it would resume talks on the enforcement of the trade deal and said the Biden government did not want to “ignite” tensions with China.

But Sullivan, one of the White House’s most aggressive China hawks, had pushed for the announcement of additional steps towards higher tariffs on industries that Beijing subsidizes during the administration’s month-long review of Trump’s trade policies, people with knowledge of the negotiations said.

Tai opposed going so quickly, arguing that it would poison the new talks with Beijing and that America’s Biden administration shouldn’t give up on previous trade commitments, even those made under Trump, people said. According to trade law, the US must open talks with a target nation before taking steps to add new tariffs.

The White House says Biden’s team is on the same page after a lengthy review of Trump’s trade policies, which included not just Sullivan and Tai, but also ministries of commerce, finance, and others.

“The Biden administration has conducted a solid inter-agency review of US-China trade relations in order to implement President Biden’s vision of balancing US-China trade and economic ties to protect American workers from unfair trade policies and the Middle class will be empowered, ”said a senior administrator.

“The final decision had the full support of President Biden, the National Security Council and the relevant authorities,” added a USTR spokesman.

US law requires the White House to first investigate whether a foreign government is improperly subsidizing its domestic industries before imposing new tariffs. When the Biden White House will do this remains unclear, but people with knowledge of administrative talks said it likely depends on how the Chinese get involved in the early rounds of talks.

Regardless of how Beijing reacts, government officials don’t expect China to ultimately honor the trade deal signed with Trump in early 2020, particularly its pledges to protect American intellectual property and implement other internal economic reforms. That will give the White House the right to initiate a new tariff investigation and eventually new tariffs on some products while others will be reduced.

Aside from a new customs investigation, Biden’s team could officially accuse China of failing to comply with the trade deal negotiated by Trump. But after the process of the deal, it would likely take years to impose new tariffs or other trade sanctions, so the White House is poised to re-investigate, people said. But USTR said all options remain on the table.

“When we conclude that [China] fails to meet a certain obligation, we will consider appropriate measures, including under the phase one agreement itself, but no decisions have been made, “said the USTR spokesman.

The Biden government will likely seek a tighter, steeper tariff structure for China, said the two people with knowledge of the administrative plans. While Trump imposed tariffs on thousands of goods imported from across the Chinese economy, the White House is considering higher tariffs for industries that receive the most subsidies and other support from the Chinese government. This could include steel, solar panels, batteries, semiconductors, and other technologies.

“We will be the result of the talks with the [Chinese government]’said the USTR spokesman for supply chains. “

The White House will also seek to provide tariff relief to companies that are not served by Beijing’s most favored sectors, either through tariff cuts or exemptions. Sullivan and other government officials believe that doing so would allow them to punish China for what they believe to be underhand trade practices, while also providing relief to some American firms affected by the trade war. The White House has already reopened the process for businesses to apply for duty exemptions on more than 500 products from China, and has indicated that more carve-out opportunities are on the way.

Trump’s tariff cut has support in the Senate Finance Committee, even from Republicans. Democratic Sens. Bob Menendez (NJ) and Ben Cardin (Md.) Both said in interviews that they want to announce a new customs investigation into Biden. And Finance Committee member Mike Crapo (R-Idaho) said he would like the White House to pull back on tariffs hitting American industries.

“There have to be adjustments or waivers or other refined applications of our [trade] Sanctions policy, otherwise we will hit our own American producers, ”said Crapo. “In investigating this, we need to make sure that the application of our sanctions doesn’t look like a bull in a china shop. It has to be refined and well done. “

Doug Palmer contributed to this report.

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