Trans-Pacific view | Economy | East Asia
Four years and a new president later, US tariffs on Chinese products remain in effect.
Yes, the trade war between the US and China is still going on. Donald Trump started his presidency by investigating unfair trade practices in China and then imposing 25 percent tariffs on the Asian nation. Four years later, those rates remain. Even after the Phase One trade deal (intended to be the first in a series of deals) was signed in January 2020, US tariffs on Chinese products remained in place. When the COVID-19 pandemic hit, the trade war faded into the background, used only to highlight China’s inability to meet the terms of the deal to buy another $200 billion worth of U.S. products relative to 2021 by 2021. the 2017 level due to the disruption caused by the pandemic. The trade war continues to plague the US economy, even under Biden’s new administration.
The Biden administration has made no changes to tariff structures and is said to be examining the phase one trade deal. Wang Yi, China’s foreign minister, recently asked President Joe Biden to resume talks with China to lift tariffs and sanctions. Wang pointed out that the United States has greatly reduced bilateral talks at all levels.
While talks on the trade war have yet to take place, Biden signed an executive order in late February to analyze global supply chains in four industries hit hard by the pandemic. These include computer chips, batteries for large-capacity electric vehicles, pharmaceuticals and essential minerals in electronics. The semiconductor industry faced serious bottlenecks at the start of the global pandemic when Chinese factories were shut down. These industries were also hit by the US-China trade war, and the two external shocks prompted many C-suite executives to reassess the resilience of their companies in the global supply chain.
Biden’s new supply chain strategy requires 100-day assessments for manufacturers and distributors in these critical industries, and a year-long assessment of supply chains in six broader industries. The main purpose of the assessments is to understand the extent to which the industries are at risk, and ultimately to encourage industries that are at risk to move suppliers out of risky conditions or locations. How the Biden administration will change supply chain structures is unclear. (China, for its part, has noted that the semiconductor industry needs global collaboration for healthy growth, but also wants to increase self-sufficiency in competing technologies.)
The results of the supply chain review can be used to discuss existing supply chains with China. However, US trade officials have not claimed that this will be used as a starting point to review the terms of the trade war. Until the trade war is resolved, losses from higher costs will continue to mount. High US tariffs continue to apply to $370 billion worth of products imported from China. These include a wide variety of goods from machine parts to seafood.
The ongoing trade war is costly and must be addressed now. The issues to be addressed during the trade war go beyond an exploration of supply chains. They cover the material in the Phase One agreement, including intellectual property rights, technology transfer and expansion of trade purchases, as well as a general hostile approach to US-China trade that sees a trade surplus between the two countries as unfair to the United States. . States. Time must be taken to carefully address these issues through a series of US-China meetings.
The Biden administration has expressed a desire to first discuss trade issues between the US and China with its allies. It is critical that they do this immediately so that relations between the United States and China can be restored. The implication of the US government’s priority on supply chain reform is that Washington wants to secure its supply chains in order to reduce dependence on China and increase competitiveness with China in manufacturing goods such as semiconductors. Still, the United States should not waste time engaging with China in order to strengthen its past mutually beneficial relationship.
The need for immediate engagement with China is especially important if aspects of China’s technology regime are seen as ‘techno-authoritarianism’. As the United States prepares a review and legislation that would ultimately aim to bring chip manufacturing back home and invest more in technology, the focus in the US talks with China should be on ways the two countries can work together and the worst effects of the trade war.