More than seven months after the start of the Biden administration, U.S. businesses say they are increasingly frustrated with the White House’s approach to China, with conflicting policies imposed during the Trump era still in place and President Joe Biden offering little clarity on economic engagement with the second-largest economy.
The relationship between the two economic superpowers remains deeply fractured. US import duties still exist on about $ 360 billion of Chinese goods, and nearly all of the exemptions that protected more than 2,000 products from those tariffs have expired. A host of export controls and bans are still in place, leaving US tech giants such as Qualcomm, Intel and Google uncertain of how to approach the Chinese market and offering little hope that the decoupling of the world’s two largest economies will reverse at any time. soon.
Much to the dismay of some American business leaders, Biden amplified some of the Trump administration’s punitive measures. In July, the Biden administration expanded the list of Chinese officials under U.S. sanctions for their role in undermining Hong Kong’s democratic institutions. In June, the president issued an executive order adding more Chinese companies to a ban on US investment in Chinese companies with links to the country’s military or that sell surveillance technology used to suppress dissent or minorities. religious.
Yet Biden and his top advisers have yet to elucidate their vision for economic relations with Beijing, saying they will make the administration’s approach known once a broad review of China’s trade policy is completed. . But the review went on for months with no public timetable for its conclusion.
As a result, companies are pushing hard for 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 to be confident that they can do business with a financially significant market.
âThe business community has been frustrated by the lack of concrete economic policy in China,â 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 preconceptions about China.”
The future of U.S. trade relations with China is one of the biggest global economic questions facing Biden and his advisers. China has devoted enormous resources to its economic ambitions and plans to dominate high-tech industries like artificial intelligence and robotics by providing government subsidies to Chinese companies and using other tactics, including espionage. While the Trump administration signed an initial trade deal with China that included commitments to purchase agricultural and other products, the deal failed to address a number of key concerns, including Chinese state-owned enterprises and industrial subsidies.
During his run for the White House, Biden assaulted President Donald Trump over his trade war and vowed to recruit allies to counter China over its business practices. Since taking office, Biden has resolved a long-standing trade dispute with the European Union and persuaded European officials to adopt a more assertive trade policy towards China this year. And he presented his infrastructure plan as a way to counter Beijing, saying it “would put us in a position to win global competition with China in the years to come.”
But the administration has said little whether it intends to resume economic talks and resolve outstanding issues, including tariffs. Sometimes officials have offered somewhat dissenting views.
Treasury Secretary Janet Yellen told the New York Times this summer that the tariffs hurt American consumers, but she also warned that Chinese subsidies to exporters present a challenge for the United States. US Trade Representative Katherine Tai described tariffs as leverage.
Asked about the administration’s tariff review on Wednesday, Jen Psaki, the White House press secretary, said: “I don’t have a schedule for you on when this review will be completed.”
Business impatience with the administration’s approach is growing. Business leaders say they need to know whether American companies will be able to do business with China, which is one of the largest and fastest growing markets. Business groups say their members are disadvantaged by tariffs, which has increased costs for US importers.
âWe should do everything we can to increase China’s use and dependence on US technology products,â said Patrick Gelsinger, chief executive of Intel, in an interview last week. The administration “is trying to define a framework for its political engagement with China,” he said.
“For me, just saying ‘let’s be tough on China’ is not a policy, it is a campaign slogan,” he added. âIt’s time to get down to the real work of having a real trade relations and engagement policy around trade and technology exports with China. “
In early August, a group of influential US business groups sent a letter to Yellen and Tai urging the administration to resume trade negotiations with China and reduce tariffs on imported Chinese products.
“The main type of dilemma that businesses face right now is uncertainty,” said Craig Allen, chairman of the China-US Business Council, who organized the letter. âWill the tariffs stay in place? Are they in place in perpetuity? What is the exclusion process for requesting a tariff exemption? Nobody knows.”
Allen said his group organized the letter because they wanted to ensure that the views of business, in addition to those of labor and environmental groups, would be taken into account when China’s review by the ‘Biden administration.
“Many find it ironic that the Biden administration is following the Trump administration’s game plan on China so closely,” he said.
Other organizations that signed the letter included the United States Chamber of Commerce and the Business Roundtable, as well as groups representing sectors of the economy with close commercial ties to China, such as Pharmaceutical Research and Manufacturers. of America, the Semiconductor Industry Association, and the American Farm. Federation of offices.
“We are now dealing with all of these other supply chain disruption issues that cost businesses millions of dollars,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation. , who also signed the letter and represents a sector that has become heavily dependent on imports from China. “Having the extra fares is difficult for planning purposes.”
Business groups are not uniformly in favor of lifting tariffs. The National Council of Textile Organizations, which represents the U.S. textile industry, wants the administration to maintain tariffs on finished garments and home textile products from China.
âWe were pretty strong in our message to the administration saying please continue this approach to toughen up China,â said Kimberly Glas, president and CEO of the textile group.
Any decision to cut tariffs could also have domestic political implications in the United States, where a harsh mentality towards China has permeated the two main parties. Any steps the Biden administration has taken to roll back Trump-era policies towards Beijing could be seized by political opponents seeking to portray Biden as insufficiently harsh on China at a time when the country is engaged in military build-up. fast.
Asked about the administration’s review of China’s trade policy, Tai responded by saying that she was aware that “time is running out.” However, she refrained from providing an overview of steps the administration might seek to take.
“As to how we need to approach this business relationship,” Tai said at a virtual event last week, “we need to approach it with deliberation.”