Corporate America was happy to give President Joe Biden a chance to reset his predecessor’s approach to China. Now, they want action.
Nearly eight months into his presidency, America’s largest corporations are voicing frustration that Biden has not rolled back any of former President Donald Trump’s major tariffs, particularly the duties on $350 billion worth of Chinese imports.
Other than announcing a top-to-bottom China review in January, Biden’s administration has given little indication how it will handle trade issues with its chief global rival. That has corporations leaning on Congress to pass relief on tariffs and trade restrictions this fall.
The administration and its supporters say they have been appropriately cautious in approaching China after four years of Trump's trade-policy-by-tweet. But it’s also got industry representatives in Washington starting to wonder if Biden’s self-professed “worker-centered” trade policy will look any different from Trump’s “America First” model when it comes to China.
“If the Biden administration wants to make the case that they have a different approach, it’s time to lay out the strategy they have promised,” said Anna Ashton, vice president at the U.S.-China Business Council, which represents more than 250 corporations that do business in both countries. “To the extent they’ve given any clues on strategy, those clues have not really suggested they are planning to diverge from the course we were on at the end of the Trump administration.”
The industry push for clarity on Biden’s approach to China comes amid rising tensions between the world’s two largest economies. Though Biden has taken no action on tariffs, he has continued to issue sanctions as well as trade and investment restrictions on Chinese individuals and firms linked to human rights abuses. Beijing has struck back with sanctions of its own and cracked down on Chinese companies listed on U.S. stock exchanges.
All the while, the sides refuse to talk trade. The phase one trade deal Trump and Chinese President Xi Jinping signed last year calls for meetings every six months. But U.S. Trade Representative Katherine Tai and her counterpart, Vice Premier Liu He, have not spoken since an introductory call in May, and that was not under the framework of the trade deal.
USTR declines to say when the next conversation will take place. That’s increasing corporate concern that the White House is not sufficiently interested in improving the business relationship with China.
Earlier this month, the U.S.-China Business Council led a letter from more than 30 large corporate interest groups urging the administration to provide relief from Trump’s tariffs and return to the negotiating table with China. “These steps are sorely needed to mitigate the tariffs’ significant and ongoing harm to the U.S. economy, U.S. workers, and U.S. national competitiveness,” wrote the groups, including the U.S. Chamber of Commerce and Business Roundtable.
The Office of the U.S. Trade Representative, which is leading the China trade review, says that it is only doing what Biden promised. Even before he won the presidency, Biden’s surrogates warned that trade policy would take a back seat early in his administration, as the White House focused on passing domestic economic stimulus amid a review of Trump’s trade actions.
The administration says Biden has already moved to repair diplomatic relationships with allies burned by Trump’s bombastic style by signing a deal to pause the Boeing-Airbus subsidy dispute with Europe, agreeing to work with them to combat Chinese steel flooding global markets, and creating a new Trade and Technology Council with the EU.
"Along with historic infrastructure investments to Build Back Better at home, we are conducting a robust, strategic review of our economic relationship with China and engaging a wide range of stakeholders, including the business community, to create effective policy that puts American workers, farmers and businesses in a stronger position to compete with China and the rest of the world," said a USTR spokesperson.
But officials from corporate America say they see those efforts as largely symbolic, and that they still don’t know what the White House aims to achieve by talking more with friendly nations.
“We all understand the need for a tough and broad review, but we’re almost nine months into the administration and we haven’t seen anything about what the policy is or what it’s going to be,” said Jon Gold, vice president of supply chain and customs policy at the National Retail Federation, which represents more than 18,000 retailers including major companies such as Walmart and Macy’s.
"We appreciate the work that is ongoing with our allies to address some of the issues, but as companies are continuing to recover through the pandemic they’re still facing these barriers with the tariffs in place that are harming their ability to fully recover,” Gold added.
Companies are also feeling spurned by the administration on other trade priorities. Even as USTR has not announced anything on its China review, the administration has been forceful in other actions. That includes continuing to crack down on companies doing business in the northwest Chinese region of Xinjiang, the site of broad human rights abuses the U.S. has labeled a genocide.
The trade office has also been aggressive in fighting union-busting at Mexican auto parts factories by relying on the tougher language in the the North American trade pact Trump signed last year.
At least, industry groups say, they expected some action to ease the burden of Trump’s tariffs on U.S. businesses, which Biden attacked on the campaign trail. They say they are particularly frustrated that he has refused to reopen the exemption process on the so-called Section 301 tariffs Trump imposed on China, which closed before Biden took office.
“The exclusion process under the previous administration was a bit of a flawed process and more of a black box than anything else,” said Gold. “We certainly welcome the opportunity for USTR to make a new process, but in the meantime they could have put the exclusions that expired back in place so companies wouldn’t have had to have a 25 percent tax increase effective Jan. 1.”
The anxiety over tariffs has also been increased by some mixed messaging from administration officials. Commerce Secretary Gina Raimondo, for example, has repeatedly praised the duties Trump imposed on steel imports for saving American jobs.
But Treasury Secretary Janet Yellen has also criticized the tariffs and the phase one trade deal broadly, saying they “hurt American consumers” while not addressing structural issues in China’s economy. Those contradictions and the slow pace of the review has industry officials who welcomed the nominations of Biden’s economic team scratching their heads.
In face of inaction on tariffs, corporations are pushing for Congress to step in. They’re supporting provisions inserted into the Senate’s anti-China economic bill that would reopen the Section 301 process, reform the implementation process for federal trade restrictions, and renew expired tariff exemption programs for developing countries and intermediate goods used in American manufacturing. The administration has yet to put its weight behind any of those provisions, creating more frustration from industry officials.
“Given the level of expertise and knowledge that this group has, they should be able to move at a more rapid clip, certainly in articulating their vision,” said an industry source who asked to remain anonymous because of ongoing work with the administration. “The sand in the hourglass is running out.”
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