The Biden administration has, for quite a while now, actively pursued its trade war with China.
It has retained all the tariffs that the Trump White House placed on imports of Chinese goods in 2018 and 2019. It has forbidden American exports of advanced semiconductors to China and secured cooperation with that ban from American allies Japan and the Netherlands. President Joe Biden has also signed an order forbidding American investments in Chinese technology. Further, he has ensured that China will gain no benefit from the sale of electric vehicles in the United States by disallowing any of the tax breaks offered by the Inflation Reduction Act to vehicles made in China or containing a significant Chinese contribution.
President Biden would have undoubtedly gone further than this had his trade policies not suffered reverses in Europe and elsewhere in Asia. Those problems will likely keep him from further action against China.
The most dramatic failures have occurred in Europe. Although President Biden kept in place the Trump tariffs on imports from China, he suspended for two years (but didn’t repeal) the tariffs that former President Donald Trump had placed on European steel and aluminum, 25 percent on the former and 10 percent on the latter. The president and his team hoped this suspension would ease the way for the United States to reach a formal trade agreement with the European Union, especially a way to deal with the global overcapacity because of China’s production of these metals.
President Biden had also hoped to work out an agreement on cooperation between Washington and Brussels on climate issues. But, in large part because of American insistence on labor and environmental standards, as well as the retention of domestic subsidies built into the Inflation Reduction Act, the two sides couldn’t reach concord and remain without the much-sought-after agreement. The best the president can do is extend the tariff suspension for two more years in return for a European promise to not impose counter-tariffs until after the 2024 election.
In Asia, the White House has had two small successes. In June 2023, the United States signed a trade and investment deal with Taiwan. Japan and the United States also reached an agreement in March 2023 about critical materials for electric vehicles. A similar deal with the UK looks close.
But President Biden had hoped for much more. He and his team had wanted to make definite the otherwise vague outlines of Washington’s 2022 economic cooperation pact with 13 Indo-Pacific countries. In particular, Washington was keen to settle on rules for digital trade, including cross-border data transfers on customs and supply chains. None of that has happened. Like Europe, American insistence on labor and environmental standards made much of Asia wary of a commitment. The failure of a digital agreement especially introduces worries that Beijing will now step in and establish rules of engagement.
Given the way things stand today, President Biden has little chance of presenting substantive trade successes to American voters this coming fall. In some environments, that would matter little, except perhaps to elements of the American business community and the U.S. Chamber of Commerce. But this year, the lack of strong trade agreements is a matter of popular interest. Primarily, these failures weaken the by-now popular commitment in both Congress and the public to counter China in Asia and contain its efforts at trade dominance and hegemony. Secondarily, the lack of agreements raises the probability that a possible Trump presidency in 2025 would reimpose tariffs on European steel and aluminum and, as the former president has promised, impose 10 percent tariffs across the board.
