WASHINGTON — The U.S. administration led by President Joe Biden is set to resume negotiations with Beijing as part of its long-awaited strategy for handling trade with China.
U.S. Trade Representative Katherine Tai is expected to speak to Chinese vice premier Liu He by telephone over the next few days, calling on China to respect the “phase one” trade agreement it signed with Washington under former President Donald Trump.
The U.S. also plans to resurrect partial exemptions on punitive tariffs to help curb the impact of trade tensions on its domestic industry.
That comes as Tai prepares to unveil the Biden administration’s China trade policy in a speech on Monday. To prompt Beijing to abide by the phase one agreement, Tai is expected to underscore that Washington 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.”
The U.S. aims to persuade China to correct unfair trade practices through dialogue, without setting a specific deadline for talks.
The U.S. plans to reinstate tariff exemptions, which expired at the end of 2020 apart from on pharmaceutical products. While the administration is yet to decide exactly which items may qualify for exemptions, such decisions will be made in line with policy priorities. It is possible that imports related to climate change and infrastructure, including renewable energy-related items, may be spared from the tariffs. The previous administration exempted products that were difficult to import from countries other than China, including machine tools.
In the trade talks, Tai is also expected to demand China corrects what the U.S. sees as violations of intellectual property rights. At this point, Washington has chosen not to negotiate a “phase two” deal, in which Chinese structural issues, including what the U.S. sees as Beijing’s excessive subsidies to domestic industries, would be discussed.
Under the phase one deal, China promised to increase U.S. imports by $200 billion in a period from 2020 to 2021, from the pre-trade war level in 2017. China’s total imports from the U.S. in January to August this year remained just 62% of the target, according to the Peterson Institute for International Economics.
Judging that China had violated intellectual property rights, the Trump administration slapped tariffs on Chinese products in phases, starting in July 2018. China retaliated and the two countries entered a trade war. The U.S. has so far imposed an additional 25% of duties on imports worth a total of about $370 billion.