US tariffs on China give negotiating leverage, says trade chief

(Bloomberg) – U.S. tariffs on more than $300 billion in annual imports from China provide significant leverage and are helpful from a negotiating perspective, President Joe Biden’s trade chief says amid a debate within his administration over whether to keep the rights in place.

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“Chinese tariffs are, in my view, significant leverage, and a trade negotiator never strays from leverage,” U.S. Trade Representative Katherine Tai said during a Senate hearing on Wednesday in response. to a question from Sen. Bill Hagerty, a Tennessee Republican, about whether removing the duties would encourage “more bad behavior” from Beijing.

The comments come after Biden said on June 18 that he was deciding whether to cut one of the functions. They were first imposed by then-President Donald Trump from 2018 to pressure China to end intellectual property infringement and the practice of forced technology transfer. .

Tai also said there was “a limit to what we can do” to mitigate inflation through tariff changes.

“The next steps on equities, they’re pending” with Biden right now, Tai told senators.

The remarks contrast with those of US Treasury Secretary Janet Yellen, who said earlier this month that the tariffs had hurt US consumers and businesses and were contributing to the fastest inflation in 40 years. The duty cuts could help lower prices, Yellen said, while acknowledging that the cuts are not “a panacea” for fighting inflation. The Biden administration is looking to “reconfigure” tariffs, she said.

Commerce Secretary Gina Raimondo also said earlier this month that it “may make sense” to lift tariffs on certain products to keep inflation in check.

The United States must use all available tools and develop new ones to defend its economic interests and values ​​against China’s unfair practices after the talks showed clear limits to the country’s willingness to meet its past commitments, Tai said on Wednesday.

The United States, through direct talks with Chinese leaders starting in October 2021, has pressed Beijing to honor the so-called phase one trade deal reached with the Trump administration, Tai said. But several rounds of “difficult talks” made it clear the nation was not interested in following through fully, she said.

“It’s part of a pattern,” Tai said. “The United States has repeatedly requested and obtained commitments from China, only to find that lasting change remains elusive.”

The United States must now turn the page on the old playbook, she said, repeating previous comments. The United States has renewed its commitment to partners and allies who are hurt by China’s unfair trade and economic practices, Tai said. Biden recognizes that the United States must work with other countries to address policies that “are fundamentally at odds with the modern global trading system,” she said.

Read more: US trade chief says new direction needed because China hasn’t changed

Beijing and Washington fought a trade war from 2018 to early 2020, when they called a truce after China pledged to increase imports from the United States over the next two years and resolve intellectual property issues. Yet the United States has kept tariffs in place on more than $300 billion in annual imports from its geopolitical rival, and China’s purchases have failed to live up to its commitments. ‘purchase.

While some companies have benefited from protection against Chinese imports, companies that use the goods as inputs in areas such as manufacturing have been harmed. Democratic and Republican lawmakers have pushed the Biden administration to broaden and deepen a tariff exclusion process and review past product denials.

Read more: Biden says he’ll talk to Xi ‘soon’, considering tariff easing

The functions support the Biden administration’s “deliberative long-term vision” to realign relations with China with U.S. priorities, Tai said.

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