No end to US trade war with China, Biden administration pledges in policy document

US President Joe Biden's administration issued a policy document on Friday that pledged to double down with a strategy of realignment on trade with China, a sign that tension between the world's two largest economies shows no signs of abating.

The 2024 Trade Policy Agenda and 2023 Annual Report to Congress released by the office of US Trade Representative Katherine Tai, sought continued action against "harms wrought" by what it called Beijing's "trade and economic abuses".

"We are also considering all existing tools - and will seek new ones as needed," the report said, contending that actions so far had allowed the US to "engage and compete" with Beijing "from a position of strength".

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The US accuses China of maintaining a non-market economy that it seeks to use as leverage to distort competitive markets and concentrate supply chains under its control through massive state subsidies.

Washington has tied these concerns to national security, most recently on Thursday, when Biden ordered an investigation into potential threats posed by China-made electric vehicles. The move brings with it the possibility of future restrictions.

In recent years, Washington has also enacted several investment laws of its own that dole out billions of dollars in subsidies and tax breaks to repair American infrastructure and reinvigorate domestic manufacturing capacity to reduce dependence on China.

In 2018, Biden's predecessor Donald Trump imposed tariffs on Chinese imports to address the bilateral trade deficit, accusing Beijing of flooding the US market with Chinese goods.

The Biden administration has mostly kept the Trump-era duties on imports worth US$350 billion intact while allowing individual parties to apply for exclusions. A review of the effectiveness of the policy in boosting domestic manufacturing that began in 2022 is still awaited.

The USTR document on Friday said that it would continue "a targeted tariff exclusions process to ensure that our economic interests are being served, and we will keep open the option of further tariff exclusions processes as warranted".

The report comes as Biden prepares for an electoral rematch with Trump, who has promised tariffs of 60 per cent or more on Chinese imports and a flat 10 per cent on all other foreign goods if he is re-elected in November.

The US remains one of China's top trading partners, though in 2023 Mexico became the leading source of goods imported into the US - ahead of China for the first time in 20 years. Still, more than a third of US imports come from Mexico, China and Canada.

Acknowledging that the "complex and competitive" US-China economic and trade ties had global repercussions, the agenda for 2024 includes a renewed focus on assembling a coalition to tackle the challenges posed by Beijing.

China's commerce minister, Wang Wentao, meets with US Trade Representative Katherine Tai on Monday. Photo: Ministry of Commerce of PRC) alt=China's commerce minister, Wang Wentao, meets with US Trade Representative Katherine Tai on Monday. Photo: Ministry of Commerce of PRC)>

"The United States will continue to engage with partners and allies in multiple formats to develop and coordinate effective responses to non-market policies and practices in order to defend US workers and industries, enhance economic security, and strengthen supply chains," the report said.

Washington is currently negotiating trade arrangements under the 14-nation Indo-Pacific Economic Framework for Prosperity or IPEF, Biden's first major trade initiative launched in 2022.

Its participating countries include Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam. Collectively, these countries account for 40 per cent of global gross domestic production.

By November, the four-part framework had reached a consensus on three of the pillars - supply chains, clean economy, and fair economy - but left the trade pillar out as Biden pursued what it calls a "worker-centred trade policy" over traditional trade liberalisation.

Many IPEF partners are also members of trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). Unlike IPEF, both agreements offer free-market access and reduced tariffs.

Another set of trade talks are continuing with Taipei, which signed its first agreement with Washington under the US-Taiwan 21st Century Trade Initiative in June. That deal included allowances for electronic documentation and payments, measures meant to speed up trade between the two markets.

Even though Taipei has stated a wish to broaden the pact, Washington has ruled out any free trade agreements.

"We are creating new and innovative trade arrangements with our allies and partners, enforcing existing ones, and bringing more diverse voices to the table - to drive inclusive economic growth for more people across our society," Tai said while releasing Biden's new trade vision on Friday.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.