The U.S. Trade Representative, Katherine Tai has determined that in accordance with Section 301 of the Trade Act of 1974 that policies and practices exercised by China with respect to technology transfer and intellectual property were unreasonable and discriminatory and have restricted U.S. commerce. The previous Administration imposed four rounds of tariffs comprising two-thirds of U.S. imports from China with some Section 301 tariffs subject to specific exclusions to reduce the burden on U.S. consumers. Tariffs will remain based on the statements by U.S. Trade Representative Katherine Tai in a Monday October 4th address to the Center for Strategic International Studies on U.S.-China trade relations. Katherine Tai regards tariffs as a “mechanism for creating the kind of effective policies 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.”
Despite representations from domestic trade groups to relax tariffs, the Administration is intent on maintaining leverage on China. Ambassador Tai considers that China has not complied with the requirements of the February 2020 Phase-One Trade Agreement and will negotiate with China from a position of strength and firmness. This was made clear in discussions between Ms Tai and her counterpart Vice-President He in a virtual meeting this past week when a relaxation of tariffs was requested.
U.S. economists, including the National Bureau of Economic Research, maintain that U.S. consumers who purchase items imported from China have experienced higher prices, belying the previous contention that “China is paying”. The tariff issue is no longer a manifestation of simple economics but is now clearly a political issue with national security overtones. The situation has been complicated by COVID which has further disrupted the supply chain of goods from Asia.
Irrespective of pre-election rhetoric, the current Administration is justifiably following many of the principles and actions of their predecessors. Our trade representative is experienced, knowledgeable, and above all understands the motivation and mentality of her adversary. This is to our benefit and will hopefully motivate China to live up to their international agreements.