Biden’s plans to cool Trump’s trade war with China
On paper, the Biden administration is keeping in place the tariffs on imports and other protectionist measures Donald Trump imposed on China during his one-term presidency. But Biden is also hinting at deescalating Trump’s trade war and opening the door to better relations with the world’s second-largest economy—if China does its part.
The Biden administration has announced a “new approach” toward China that has much in common with the old approach under Trump. Biden will keep in place the Trump tariffs on about $360 billion worth of Chinese imports, and hold China to the “phase one” trade deal of 2019, which requires China to sharply increase purchases of U.S. exports. The Biden policy also calls out China’s rampant theft of western technology, along with state funding for Chinese megacompanies that gives them an unfair competitive advantage in global markets. Biden could seek ways to punish China for those abuses, including new anti-China alliances that could be more effective than Trump’s go-it-alone approach.
None of that is a surprise, however. Biden never said he’d reverse the Trump tariffs, and China’s increasing belligerence under President Xi Jinping has left China with few friends in either the Democratic or Republican party. Trump deserves credit for confronting Chinese trade abuses in a way that may have reset U.S. policy toward China for years to come, with no return to the more tolerant stance of pre-Trump presidents.
Exclusions ease the sting of tariffs
Biden may be establishing off-ramps, however, that could lower trade barriers between the two powers, eventually. Biden will re-establish an “exclusion” process that expired under Trump and allowed some U.S. importers to apply to the U.S. government for exemptions from tariffs. Under Trump, U.S. importers submitted as many as 53,000 exclusion requests, according to the Government Accounting Office. The Trump administration only approved about 13% of them, and some of those were temporary exemptions that expired before the whole process ended in the final days of the Trump administration.
Biden hasn’t spelled out how generous his administration’s exclusion process will be, but if used extensively it could become the norm rather than the exception. China has a similar process, for Chinese companies paying higher tariffs on U.S. imports, which China imposed in retaliation for the Trump tariffs. Exclusions could allow both countries to ease the sting of tariffs while technically keeping tariffs in place.
Case-by-case exclusions tend to be bad policy, because they allow the government to favor some companies over others on terms that can seem arbitrary or subjective. But for Biden, they may be a necessary evil, given that many…
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