When Joe Biden became the 46th U.S. President nine months ago, he did so with many promises – many of which were focused on economic revival. President Biden campaigned on an economic platform that vowed to strengthen the middle class, extend healthcare, tax the wealthy, and invest in green technology. No one can deny that a major factor affecting the U.S. economy for the past several years has been the Trump-initiated trade war with China, which resulted in a myriad of confrontational policies imposed inhibiting trade with Chinese companies. Almost a year into his presidency, Biden has offered little clarity about how he will proceed.
With American import duties still affecting over $300 billion worth of Chinese goods, and the exemptions placed to protect certain products from those tariffs expired, American businesses appear to be growing increasingly frustrated with the lack of transparency around Biden’s steps to resolve the issue. Some of the U.S.’s largest tech companies – Qualcomm, Intel, and Google – are turning to the White House with questions as to how they should approach the Chinese market – one of the world’s largest economies. The Biden administration has repeatedly shied away from answering questions on the topic, saying that a broad review of the existing U.S. China trade policy needs to take place. The review has been taking place for several months now, and no timeline has been shared for its conclusion.
Despite the lack of a formal policy, President Biden has topped up some of the Trump administration's decisions, such as adding even more Chinese officials to the U.S. sanction list and expanding the list of Chinese companies that prohibits American investment. The sanctions placed in early July targeted seven Chinese officials that played a role in carrying out policies that “systematically undermined” Hong Kong’s democratic institutions, with U.S. Secretary of State Antony Blinken saying, “Today we send a clear message that the United States resolutely stands with Hong Kongers.” This decision came after Biden’s decision in May to expand on the Trump administration’s blacklist, preventing American firms from investing in Chinese businesses a) with connections to the Chinese military or b) known to supply surveillance technology used to repress religious minorities such as the Uighurs.
Earlier this month, U.S. Trade Representative Katherine Tai spoke at the Center for Strategic and International Studies, saying: “We will use the full range of tools we have and develop new tools as needed to defend American economic interests from harmful policies and practices.” To many, this only clarified what they have suspected for months: the Biden administration, while critical of Trump’s policies, will likely continue to use trade barriers and economic means to counter China’s influence around the world.
Meanwhile, U.S. business leaders are losing their patience. Unable to leverage lower-cost Chinese factories in one of the world’s biggest and fastest growing markets, it is clear to them that American businesses are “being put at a competitive disadvantage”. U.S. Secretary of the Treasury Janet Yellen, and Katherine Tai received a letter in August from a group of nearly three dozen of the most influential American business groups – representing microchip makers, potato farmers, and retail giants - prodding them to cut tariffs and move towards a clear, collaborative trade policy with China. This letter highlighted the increased manufacturing and service costs U.S. industries face domestically, which in turn make U.S. exports more expensive and less appealing in the international market. It specifically called for the U.S. government to restart talks with China with the goal of ensuring that Beijing meets its 2020 Phase 1 trade deal commitments. These were primarily to purchase $200 billion worth of American goods. Beijing fell short of meeting that commitment by 40% last year, and is behind by 30% for 2021 as of July 2021.
Craig Allen, President of the US-China Business Council, a non-profit organization focused on providing its 200 member U.S.-based companies with vital background information and analysis on Chinese trade and investment, said that the letter came from a desire for clarity, and to remind the Biden administration that businesses had a right to have their views considered. Along with the USCB, other organizations that signed included the U.S. Chamber of Commerce, the U.S. Business Roundtable, the Pharmaceutical Research and Manufacturers of America, the Semiconductor Industry Association, and the American Farm Bureau Federation.
Jonathan Gold, VP for supply chain and customs policy at the National Retail Federation, said, “We’re now dealing with all these other supply chain disruption issues that are costing companies millions of dollars.” The National Association of Manufacturers added their support to this message with a letter of their own, addressed to Secretaries Blinken, Yellen, Raimondo, Ambassador Tai, National Economic Council Director Brian Deese, and Jacob Sullivan, Assistant to the President of the NSA.
According to Janet Yellen, “In some cases it seems to me what we did hurt American consumers, and the type of deal that the prior administration negotiated didn’t address in many ways the fundamental problems we have with China.” While the Trump administration’s initial trade deal with China included purchase commitments to protect American businesses and consumers, the agreement did not address Chinese state-owned businesses and industrial subsidies – topics which U.S. businesses are now urging the Biden administration to have a second look at.
The future of the U.S.-Chinese trade relationship remains an open-ended global economic situation, as both governments use trade to make political moves spanning alliances with other countries, the spread of influence in their own territories, etc. Across the global stage, allies to both countries hold their breath along with U.S. business leaders, to see if the Biden administration will be able to persuade Beijing to hold to the Phase 1 deal, and to protect the U.S. economy.