U.S. Trade Representative on the Trade War
All eyes are on President Joe Biden’s administration, and specifically newly elected U.S. trade representative, Katherine Tai, in anticipation of the United States’ next steps in the US-China trade war. Tai, confirmed at the end of February, made it clear that the administration is determined to achieve structural changes in China’s economy by “exploring all our options”. She intends to accomplish this through intentional systematic processes and a regulatory-driven approach. Tai exemplified these qualities during her confirmation hearing when she answered senators’ questions with control and displayed her understanding of what needs to be accomplished.
What has the Biden Administration Accomplished?
Thus far, the Biden administration has made no changes to tariff structures. However, Biden did sign an executive order in February to examine global supply chains in four key industries that were greatly affected by the COVID-19 pandemic and simultaneously the U.S.-China trade war. The industries include computer chips, large-capacity electric vehicle batteries, pharmaceuticals, and critical minerals in electronics.
This marks Biden’s first and formative action surrounding his administrations’ supply chain strategy. The 100-day government review is clearly intended to understand the past and avoid repeat mistakes in the future. Mistakes including but not limited to shortages of personal protective gear, shipping containers, and other essentials. The equally critical goal of the review is to discern to what degree industries are at risk and, eventually, how to move suppliers out of potentially vulnerable situations.
Biden is seeking to hold himself to the campaign pledge of investing in America while also attempting to secure goods from friendly nations. One of the ways the administration has supported domestic production in their first few months has been to award a $30 million contract to Australia’s Lynas Rare Earths for the construction of a processing facility in Texas. Additionally, Biden said he would seek more diverse domestic production, maintain a reserve of goods and materials, and positive partnership with allies.
How does the Review Reflect the Biden Administration?
While the comprehensive review does not promise imminent resolution of the trade war, it has set the precedent that the current administration has a definite sense of urgency to face the supply chain challenges that have been exacerbated due to the COVID-19 pandemic. Undoubtedly, there is no short-term solution for these struggling industries but the Biden administration believes the first step to recovery is through internal reflection and securing supply chains to reduce dependence on China.