Free Trade

Biden's China Trade Policy Is Littered With Contradictions

U.S. Trade Representative Katherine Tai stresses the need for American competitiveness at the same time that the White House is pushing huge tax increases on U.S. businesses. And that's just the start.

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More bureaucracy. More industrial policy. Maybe even more tariffs.

President Joe Biden's trade policy is sounding more and more like an extension of the mess that former President Donald Trump made—and even the White House top trade officials are now admitting as much.

U.S. Trade Representative Katherine Tai delivered a speech Monday morning that White House officials had been touting as a major signal of the Biden administration's shifting strategy in the trade war with China. In fact, the speech mostly doubled down on what Trump spent four years promising: that a mixture of big government at home and barriers to trade from abroad will strengthen the U.S. economy and benefit American workers.

There's plenty of evidence to show that Trump's approach failed, but what Tai outlined was more of a shift in style than in substance. Rather than all-caps tweets about China stealing jobs, the Biden administration is pushing what Tai described as "a worker-centric trade policy" that will include "smart domestic investments"—Washington-speak for giving unions more influence over policy and for lots of new industrial subsidies.

The few concrete steps included in Tai's remarks are tightly linked to the previous president's agenda. They include a promise to "discuss with China" its failure to deliver on promises made in the so-called "Phase One" trade deal inked in 2020, and a rejiggering of the flawed tariff exclusion process—one that allows federal bureaucrats to decide which American businesses have to pay tariffs and which do not—set up by the Trump administration. Rather than charting a new course, those agenda items merely refine and entrench the protectionist impulses of Biden's predecessor.

The tariffs are the most obvious part of that. More than half of the goods traded between the world's two largest economies are now subject to tariffs, according to data from the Peterson Institute of International Economics—up from less than 1 percent before the trade war began. And there should no longer be any doubt that American businesses and consumers are paying the vast majority of those added costs. Less than 8 percent of the tariff costs are falling on China, according to one recent study by Moody's Investment Service. The tariffs have also failed to drive international investment away from China, as Trump often claimed they would.

Reforming the tariff exclusion process won't fix any of that. But Tai said Monday that the Biden administration continues to view tariffs as "a very important tool" in enforcing trade agreements. In an interview with Politico last week, Tai was even more direct, saying she views Trump's China tariffs as "something for us to build on and to use in terms of defending to the hilt the interests of the American economy, the American worker and American businesses and our farmers, too."

That's a long way from Biden's pointed criticisms during last year's campaign of how Trump's tariffs had failed to achieve their goals.

What Tai outlined on Monday is riddled with similar contradictions.

She declared that "boosting American competitiveness becomes all the more important" in light of competition with China, but there's an obvious tension between that and the Biden administration's efforts to pass a tax increase on American businesses. Expecting American companies to become more competitive when you're taxing their imported inputs and then raising taxes on whatever profits they can still eke out is simply denying economic reality.

Similarly, Tai said it was "critically" important for the U.S. to work with its allies to shape trading policy with China. But that will be more difficult if the Biden administration keeps making a big deal out of the unilateral "Phase One" deal. Why? Because last year China canceled purchase contracts with some U.S. allies, such as Australia, in an attempt to meet the obligations included in the deal. Global trade is a network, not a zero-sum game, and what happens between two nations can have unintended consequences elsewhere.

Perhaps nothing Tai said made that point more explicitly than when she sought to correct William Allen Reinsch, a senior advisor at the Center for Strategic and International Studies, the D.C. think tank that hosted Tai's speech, for framing a post-speech question to Tai around the idea that Trump's trade policies had "failed, which I think most people would agree to."

"I don't think it's fair to say that I've characterized the previous administration's efforts as 'failed,'" Tai said. "What I would say is that it hasn't gotten us to where we want to go."

Most people would call that failure.

Regardless of what Washington word salads might be used to justify it all, the Biden administration is trying to repackage Trumponomics into a kinder, gentler protectionism—one that gives bureaucrats even greater control over who pays and who benefits.

NEXT: California Returns Beach Property Wrongly Taken From Black Family via Eminent Domain

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    1. Fuck Joe Biden

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  1. Fuck Joe Biden. Executive order taxation is unconstitutional!

    1. What does that have to do with anything? This is Biden.

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    2. Unless Nixon, Reagan, The Don or a Bush do it?

  2. Maybe Rep Swalwell can talk to some of his contacts.

  3. have you reached the point where you’re writing in the “totally fucking knew it already” form or are you still surprised by your Strategic Devotee?

    1. Look. Biden never tweeted a link to his campaign platform link. How was Reason to know to go there to see what his plans were?!?

      1. was more required for Eric than Build Back Better?

  4. Everyone keeps posting “Fuck Joe Biden”… to be fair, shouldn’t we be saying “Fuck [whomever it is that’s actually running the executive branch]”

    1. You must be an engineer, leave it to marketing.

    2. Not to be fair, aren’t you arguing for treating a walking corpse, a living sock puppet, to be treated fairly? Doesn’t that mean everyone gets a turn to stick their hand in?

  5. Reason better start worrying about Joe Biden’s dipomacy efforts in the Pacific, China Deterrence Policy, and prepration to defend Taiwan from invasion. The guy is inept, China is in economic trouble and looking for a way out, and Taiwan and the US Military will pay the price when Joe Biden srews up one more time.

    1. Indeed China’s in trouble. Their real estate bubble is bursting, and now the supply chain is screwing them selling their crap to the US:

      “An all-time high of 56 cargo ships are stuck waiting off the California coast, as shipping ports hit their 4th record backup in three weeks”

      https://www.businessinsider.com/shipping-delays-china-supply-chain-record-ships-stuck-california-ports-2021-8

      Expect what money China has left to be thrown at US politicians to turn their crisis around.

  6. Yes, we should certainly continue to trade with the country turning hard communist, enslaving male minorities, harvesting their organs and the organs of criminals, and forcing their wives to host political ‘guardians’ in their beds but they totally aren’t actually having sex with the women or anything.

      1. There are several jobs that they will do.

        1. Sucky Sucky they love you long time… Like kamala

  7. I remember when we were promised better, smarter economic policy.

  8. So if we cannot compete with China on an even playing field, and domestic industry requires a combination of subsidies and tariffs to survive, doesn’t that mean China is doing something that we should be doing?

    If China would kick our ass without government intervention, then doesn’t that mean capitalism is a bunch of crap? Seriously. If capitalism can’t compete with communism, then maybe we should go commie to get our economy going.

    That, or maybe protectionism is a bunch of crony crapitalism doling out favors to politically connected entities.

    Can’t be both.

    1. “Even” playing field. I mean, if we start outright enslaving troublesome minorities we could probably compete on an even playing field again, but the vast majority of us have decided that was a bad idea.

      1. So slavery is an economic winner? Maybe the South was right?

    2. If only China would go back to Communism, then I don’t think this thread would even exist.

      1. They’re a very mixed economy, and apparently we can’t compete. Does that mean we need more government involvement in the economy?

        1. Depends on how that’s defined. Tariffs are a valid tool (set out in the constitution) as a tool to deal with mercantilist foreign governments, which China absolutely is. Whether or not this or that tariff actually works– time will tell.

          Hell, the founders created the commerce clause because they knew that one state or the other would enact anti competitive practices which would be supported (or created) by said states. The commerce clause in the constitution was meant to temper those impulses. It was clear the founders knew that if you just believed everyone would be open-minded libertarian cowboys just trying to appeal to their customers’ self interest, you’d be sorely mistaken.

          1. Tariffs are a tax on imports. The people who pay are consumers. I fail to see how making stuff more expensive for me and you somehow punishes foreign governments.

            1. Tariffs are a tax on imports.

              Imports and/or exports, actually. Moreover, Just because they are being misused doesn’t mean there is no correct use or that they have no effect. That’s not an advocacy for their use, just a succinct outline of the stolen bases and oxymoronic idiocy affiliated with “Tariffs prove capitalism can’t beat communism.” But go convincing us what a transcendental thinker you are by both sides-in your both sides.

              1. Maybe we should get Art Vandelay to explain imports and exports to him.

              2. Can you think of anything outside of this left/right political paradigm?

                I’m not being team here. Just asking how our own government making stuff more expensive for us punishes foreign governments.

                That’s not team.

                And if the argument for tariffs and subsidies is that domestic companies can’t compete without them, then doesn’t that mean the other guy is doing something better? If they’re doing something better, than shouldn’t we do the same thing?

                Mocking me by calling me a transcendental thinker is just scoring points with the girls and showing you’d rather talk about people than ideas.

                1. Can you think of anything outside of this left/right political paradigm?

                  You mean like the fact that tariffs *could* be placed on exports? That other nations could tariff their exports? That still third countries could tariff imports/exports from one country but not the other?

                  You’re the one standing around fingering your own asshole with the “Shouldn’t we be doing what they’re doing?” dumbassery.

      2. I’ve seen people argue that we can’t compete with China because their government owns most of the corporations which somehow makes them invincible. Does that mean we should hand corporate ownership to the government? Of course not. So why does that make China more competitive? It’s just not logical.

        1. China cheats and has slaves. It’s not difficult.

    3. So if we cannot compete with China on an even playing field, and domestic industry requires a combination of subsidies and tariffs to survive, doesn’t that mean China is doing something that we should be doing?

      If China would kick our ass without government intervention, then doesn’t that mean capitalism is a bunch of crap? Seriously. If capitalism can’t compete with communism, then maybe we should go commie to get our economy going.

      That, or maybe protectionism is a bunch of crony crapitalism doling out favors to politically connected entities.

      Can’t be both.

      “If the US can’t compete without government intervention against a country of 4x the population working for slave wages and with massive government intervention, then we should be more like China.”

      Dang, you’re an idjit.

    4. When my dad was dodging fallout in the Pacific Theatre, there were Trading With The Enemy laws. Indeed, much of the pretext for the Pearl Harbor attack was “our” asset-forfeiture ippon on Nipponese bank accounts (many of them in Hawaii) out of pity for poor, mistreated China. Meddling in Asian economies, the opposite of laissez-faire, has dragged These States into war after war. Cui bono?

    5. Dummy thinks the founders didn’t believe in trade restrictions.

  9. This article seems like an as-usual nothingburger of outdated econ pablum.

    The supply chain issues right now are a direct consequence of the long brittle logistics tails created by globalization. Which in turn is what is being subsidized by multinationals/central banks via tariffs that really hammer the small. Taiwan can’t get packaging for auto chips from Malaysia. And with a 58% vax rate in Malaysia, there will be a few more covid burps. So car companies everywhere don’t get chips and have to slow down – with a ripple effect. China can’t get shipping containers because all the logistics tails have slowed down so all the containers are in US and Europe. Had the same problem with PPE early in pandemic. These aren’t gonna change quickly. They will create inflation – but not permanent inflation. And the same damn thing will happen much more frequently in future with zero interest rates and low tariffs.

    Not to mention that Xi JinPing is NOT Deng Xiaoping. But I don’t see any recognition that China2020 is not China 2000.

    1. What hammers the little guy is the individual income tax copied from the communist manifesto into the U.S. Constitution by persistent effort of both, repeat, both halves of the entrenched looter kleptocracy. A corporate income tax coerces what FDR styled “artificial people”–more of a match for a parasitical State, and a source more akin to the revenue-only tariff the nation was founded upon. But God’s Own Prohibitionists and parasitical communists teamed up to enact the 16th, 17th and 18th Amendments now afflicting us.

  10. I remember when critics called Trump racist for imposing tariffs on Chinese goods. They’re not hurling the same accusations at Biden for continuing the tariffs.

    1. That’s because when Trump imposed the tariffs, he made a slanty-eyed face with is fingers and laughed about it.

      1. And called them “taliffs.”

    2. White man good. Yellow man good. Orange man bad. That’s why.

    3. [WE] gang rules – members; have to stick together otherwise the [WE] foundation might fall apart. It’s gang-land governance mentality; who ever has the biggest gang wins.

      Why the USA isn’t a democracy rules nation but a Constitutional Union.

    4. Ah! Finally a sockpuppet with enough creative originality to come up with the same, sobbing tu quoque fallacy 6th-graders graduate to after outgrowing nanny-nanny-boo-boo. How soph… -omoric! How binarily kleptocratic an imitation of argumentation!

  11. Where did Trump economically put, “big government at home” ????

    His three biggest accomplishments were lowering taxes, dropped regulation and cancelling Obamacare mandates. Resulting in stronger USD and Unemployment the lowest seen since the 60s.

    You can always tell a lefty-troll because they grand-stand lies about the right that completely contradict reality. Boehm obviously is at least somewhat a lefty-troll.

  12. Reason headline:
    “Biden’s China Trade Policy Is Littered With Contradictions”

    Correct headline:
    Biden’s Policy Is Littered With Contradictions

  13. It is almost as if most of the vehement opposition to Trump was just tribal and not based on any principled policy positions.

  14. Eric should read Adam Smith, champion of Leviathan State Acts of Navigation. Northern Colonies whipped the Brits so kinder, gentler 10% “free” trade tariffs could fund government. Grasping Federalists/Whigs wanted a reassuring protective “wall.” The Nullification Crisis impasse gave way to the Civil War and communist Red Republicans exploited the rift to get their looter income tax passed and re-enslave every individual American–and KEPT the protective tariff for extra bleeding. Looking Backward, we should repeal 16A, resume the fight for a revenue-only tariff and cut spending–rather than follow Red China into communism.

  15. Free trade is better for developing countries but less good for developed economies like the USA. While we argue about it, Chinas state controlled economy is sweeping up one industry after another.

    The medical supply, rare-earth minerals and now chip shortages should be a wake up call – Trump tariffs best thing he did!

  16. When the Roosevelts’ ancestors helped destabilize China, smuggling opium past medieval junks and antique cannon, the aftermath left something like 25 million dead by the 1860s. “We” clearly earned no redemption by resisting Imperial Japan’s 1930s imitation of the example set by “civilized” Europeans. To glean the foggiest notion of how pitilessly dangerous China’s smug and resentful modern totalitarians can be I recommend “Three-Body Problem” by Liu Cixin. Confucius’ golden rule is much like the non-aggression principle revived by Ayn Rand as fallout drifted to Earth. Every LP vote reassures China’s polity that the barbarians are finally becoming civilized–while setting them a better example than England or Australia ever did.

  17. My understanding is that, unlike China’s, the American (and Canadian) governance system is heavily steered by corporate interests, sometimes through economic intimidation. This includes Big Development and Real Estate, and I’m not just talking about huge party donations come election time. To me, it’s as though the elected heads are meant to represent huge money interests over those of the working citizenry and poor. Accordingly, major political decisions will normally foremost reflect what is in the influential corporations’ best interests.

    Anyone who doubts the potent persuasion of huge business interests here need to consider how high-level elected officials can become crippled by implicit/explicit threats to transfer or eliminate jobs and capital investment, thus economic stability, if corporate ‘requests’ aren’t met. It’s a crippling that’s made even worse by a blaring news-media that’s permitted to be naturally critical of incumbent governments, especially in regards to job and capital transfers and economic weakening.

    Furthermore, Western corporate lobbyists actually write bills for our governing representatives to vote for and have implemented, supposedly to save the elected officials their own time. I believe the practice has become so systematic here that those who are aware of it (that likely includes mainstream news-media political writers) don’t bother publicly discussing it.

    Meanwhile, why wouldn’t nations like China at least try to take advantage of this (what I see as) weakness in a Western governance, i.e. big corporate profit before individual and even national interests.

  18. Biden’s China Trade Policy Is Littered With Contradictions

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