Biden’s New China Policy: Restrictions Stay for Now

October 6, 2021 Updated: October 6, 2021

News Analysis

So far, President Joe Biden is keeping most of the Trump-era China policies, including tariffs.

In his first extensive conversation with Chinese leader Xi Jinping, Biden said, “We will maintain a strong military presence in the Indo-Pacific just as we do with NATO in Europe—not to start a conflict but to prevent one [and] America won’t back away from our commitment to human rights and fundamental freedoms and to our alliances.”

In a press conference, Biden also said that a rising China is the primary threat to the United States. Just as his military policies and general stance on China echo the Trump era, so does his position on trade. So far, the administration has announced no fundamental changes in the U.S.-China trade relations, not even a removal of the tariffs.

According to U.S. Trade Representative Katherine Tai, the United States is maintaining a lot of the Trump tariffs, while keeping all options open for future policy. Meanwhile, the administration is calling on China to engage in talks and to stop using state money to subsidize industries such as semiconductors, steel, and others. In line with Tai, U.S. Secretary of Commerce Gina Raimondo told NPR that “the Chinese need to play by the rules,” and the United States needs to “hold their feet to the fire.”

Tai is seeking a meeting with Chinese Vice Premier Liu He to discuss China’s failure to meet the terms of the phase 1 trade deal. Expressing hawkish sentiment, Tai told the media that the United States must be protected from damage caused by years of “unfair competition.” The Chinese Communist Party (CCP) fell short of its agreed upon purchases of U.S. goods by 40 percent. At the same time, the CCP continues to restrict American access to many Chinese business sectors, while providing its companies with government protection, soft loans, and subsidies.

Among the many tools in the Biden administration’s arsenal is cooperation with other nations. Forming trade blocks and alliances, similar to U.S. military strategy designed to curb the Chinese regime, would provide a good opportunity for the United States to strengthen its relationship with allies around the world. This was evident during the G-7 summit when Biden recommended Europe to take a stronger stance on China trade, demanding that Beijing refrain from “non-market economic practices.”

Tariffs are another tool. While many U.S. economists denounce tariffs, few, if any, have come up with a workable alternative. Some complain that U.S. consumers actually bear the brunt of the tariffs in the form of higher prices. Others point out that high prices for consumer goods is inconsequential compared to the real problems, namely, national security, economic security, and supply chain stability—issues that both the Trump and the Biden administrations sought to address through a number of initiatives, including negotiations and tariffs.

Although the Biden administration is looking into reducing tariffs for certain goods, this does not signal a softening on their general China stance. Currently, the Office of the United States Trade Representative (USTR) is considering launching a Section 301 investigation, under the Trade Act of 1974 (19 U.S.C. 2411). The USTR has the responsibilities and authority to investigate when it suspects that U.S. trade interests have been infringed upon. The USTR also has the power to take action to enforce trade agreements. This new investigation into subsidies could result in even more tariffs.

U.S. Trade Representative Katherine Tai
U.S. Trade Representative Katherine Tai testifies before the Senate Finance Committee on Capitol Hill in Washington on May 12, 2021. (Pete Marovich/Pool via Reuters)

Another Trump-era policy which the Biden administration has maintained is restrictions, which prevents Chinese companies from gaining access to U.S. technology. Furthermore, the list of Chinese officials being sanctioned for their role in Hong Kong’s loss of freedom has also been growing.

One area where the two administrations differ is that the Biden administration has stressed other objectives such as the climate. Beijing has used this as a bargaining tool, signaling that it will only cooperate with Washington on climate issues if the United States lifts its tariffs. So far, it seems that China is not moving toward meeting its 2030 carbon emissions goals. In fact, in 2020, the CCP commissioned 38 gigawatts of new coal-fired power, which is equal to the entire capacity of Germany. With the Chinese economy in a downward spiral, it seems unlikely that Beijing will cut the power it needs for its factories or curb the questionable trade policies it needs to remain competitive.

Of course, the lifting of tariffs is contingent on China changing its trade policies. Tai said she believes China may not change. The CCP has even implemented a “Buy China” procurement policy, which is expected to funnel $1.5 billion in subsidies into selected sectors over the next five years.

U.S. trade groups support policies that suppress the Chinese regime, but they have been critical of the Biden administration’s policies, rightly stating that apart from keeping Trump-era policies, the new administration has been extremely vague about what it actually intends to do or how, exactly, it plans to make China trade fairly.

For the moment, however, the general tone of the trade policy seems to be similar to the Trump administration’s, namely, that the Chinese regime has been cheating on trade for decades and the United States will no longer tolerate it.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Antonio Graceffo, Ph.D., has spent over 20 years in Asia. He is a graduate of Shanghai University of Sport and holds a China-MBA from Shanghai Jiaotong University. Antonio works as an economics professor and China economic analyst, writing for various international media. Some of his books on China include "Beyond the Belt and Road: China’s Global Economic Expansion" and "A Short Course on the Chinese Economy."