Heavy duties

Blinken: to give big China speech

Four years after Donald Trump started to slap tariffs on billions of dollars of Chinese imports, could Joe Biden be about to call a trade truce with Beijing?

On Tuesday the US president said that his administration could drop some of the tariffs imposed on $350 billion of Chinese imports by the Trump administration as part of an effort to hold back surging prices for consumer goods in the US.

In his remarks Biden put the blame for inflation more squarely on the pandemic and Russia’s invasion of Ukraine. But he is also coming under pressure to roll back the Trump duties at a time when the Federal Reserve is struggling to keep a lid on price rises, which rose 8.3%  last month.

Earlier this month, the Biden administration took its first steps towards a statutory four-year review of the tariffs on Chinese goods, although officials have been tight-lipped about whether it will lead to removing them.

Biden held back on changing the tariff regime earlier in his presidency, citing China’s failure to meet its commitments in purchasing larger quantities of US goods and agricultural products. He would have to abandon that position in if  he relented now. Another challenge in changing his stance is that the dollar has been rising strongly against the yuan. A wholesale removal of the tariffs could trigger a surge of Chinese exports into the American marketplace, which would be politically uncomfortable.

The debate over tariffs comes at a time when the State Department is supposed to be outlining its wider China strategy in more detail. Secretary of State Anthony Blinken was expected to make a major speech last week highlighting how the Biden administration is approaching its relationship with China. But it was delayed when he tested positive for Covid. No new date for the speech has been announced, although he is expected to brief ASEAN leaders in Washington this week on the policy outlines.

There has been criticism of the Biden administration for the delay in formalising its strategy towards China, not least as Blinken has described the bilateral relationship as “arguably the most important… that we have in the world”.

Some of the relationship has been referenced in other policy documents, however, including the Indo-Pacific Strategy, which was released in February. It highlighted how the US isn’t seeking to “change the PRC [People’s Republic of China]  but to shape the strategic environment in which it operates”.

Also upcoming for this week’s ASEAN summit is further detail on the Indo-Pacific Economic Framework (IPEF), which has been designed to counter Chinese influence in the region in areas including trade and “supply chain resiliency”. The Americans are expected to push for a regional deal that incorporates issues like cross-border data flows, as well as common rules for labour, the environment and climate change.

The push for the IPEF comes at a time when China is growing its own economic clout in Asia through platforms including the Regional Comprehensive Economic Partnership (RCEP), a 15-member trade deal where the United States is absent.

The eight ASEAN countries coming to Washington this week would probably be more interested in the rebirth of the Trans-Pacific Partnership, a pact to reduce tariffs across the region agreed by the Obama administration that was then dumped by Trump. But Biden is unlikely to turn back to the TPP (which pointedly excluded the Chinese) because his Democrat base is wary of its potential impact on the American labour force, as well as other policy priorities like climate change.

That adds to the situation in which the Biden government largely seems to be following the playbook of its predecessor administration in its approach to relations with Beijing. “The China Strategy is basically ‘Trump-plus with sophistication’ but with partners and allies,” an insider familiar with the strategy told Politico last week. Perhaps that will mean an extension of most of the tariffs on Chinese goods too…

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