Trade Updates

We’re more than just brokers – we’re knowledge leaders. Stay compliant with Customs, and save on your bottom line with recent updates here.

Biden to Consult with Allies Before Acting on Tariffs, Says New NSA Sullivan

Posted January 11, 2021


As businesses in the United States, Canada, and elsewhere look to see what shape and direction the Biden administration will assume once it takes office later this month, some clear signals in this regard were provided during a recent interview with the incoming National Security Adviser Jake Sullivan on Fareed Zakaria’s Global Public Square program.
Fareed Zakaria and Jake Sullivan on CNN's GPS show

ZAKARIA: ... Jake, one of the things that Joe Biden said on the campaign trail often and forcefully was that Donald Trump’s trade wars with China had not worked, that it had imposed huge costs on American consumers, there was an ad, I recall, that aired in which he pointed out, you know, manufacturing is in recession, farmers are paying the price, the whole thing has not worked, and that we’ve lost. And yet the Biden administration, Joe Biden says he will not reverse those tariffs. So explain to me, if you have a bad policy that didn’t work, why would you continue it?

SULLIVAN: Well, the fundamental shortcoming of the Trump administration’s trade strategy was that it was a go-it-alone strategy. It was taking on China as the United States by itself without allies and partners that comprise up to 60 percent of the global economy. And frankly, worse than go it alone, it was also open two and three front trade wars by picking fights with those very allies and partners that we would want on our side.

So what President-elect Biden wants to do is have a period where he can consult with our partners and allies in Europe and Asia and elsewhere to talk about how together we can bring leverage to bear on China to change its most problematic trade abuses, including dumping, including illegal subsidies for state-owned enterprises, including forced labor and environmental practices that hurt American workers and farmers and businesses.

He hasn’t had the opportunity to do that during the transition because of the one-president-at-a-time principle. We’re not engaging with foreign officials while President Trump is still in office. So we need that opportunity to consult. That will give us the chance to develop a common strategy with allies and partners to exercise the kind of clear-eyed leverage-based approach to bring China to the table and get them to alter or amend their most problematic trade practices that harm the American economy.

ZAKARIA: You talk about allies in Europe and Asia, but yet they seem to be going along and cutting their own deals with China. The New York Times points out that you tweeted essentially hinting to the European Union that they should hold off on this huge China-European Union Investment Treaty until you guys got a chance to consult with them. In fact, they accelerated and have already signed it.

Asian allies, 50-nation countries signed up with China for this Regional Comprehensive Economic Treaty. I mean, it feels as though the world is moving ahead, forging these trade alliances, and the country that used to do that, the United States, is sitting at the back of the bus putting up tariff barriers and walls. And again it seems like Joe Biden is not really changing that course.

SULLIVAN: Well, but, Fareed, that’s not a repudiation of Joe Biden’s approach. That’s a repudiation of Donald Trump’s approach. That is the wages of four years of alienating our allies and of refusing to work with them on these issues, and that’s true. Both in the Asia-Pacific and in Europe.

And so when Joe Biden takes office on January 20th, and sits down in consultation out of mutual respect with key like-minded economies that as I said collectively comprise almost 60 percent of the world’s economy, we are confident that we can develop a common agenda on issues where we share deep concerns about China.

And it’s not just on trade. It’s on technology. It’s on human rights. It’s on military aggression. And so our proposition, which we will begin testing when we take office, because, of course, we are not in office yet, is that that will put us in a stronger position to be able to deal with China effectively, in a clear-eyed way and in a way that ultimately delivers the kind of results that have entirely escaped the Trump administration over the last four years.

ZAKARIA: There is a domestic political reality about the China — about China policy, which is that the Republican Party or certain key Republicans have clearly decided that they are going to attack you relentlessly from the right and claim that whatever you do is some kind of soft on China policy, is appeasement.

When the Democratic Party has faced those kinds of attacks from the right in the past, it is often gone along with a kind of, you know, me-too hawkishness that hasn’t ended up so well. I’m thinking about the Johnson administration terrified that it would be attacked from the right, that it was going to lose Vietnam to communism. I’m thinking about the Iraq war when a whole number of Democrats, including Joe Biden, were clearly worried about being outflanked on the right by the Republicans.

Is this a real and present danger in China policy now? Are you — do you have the room to maneuver and create a sensible China policy without worrying that it is going to be excoriated by Republicans?

SULLIVAN: This is the — one of the many benefits of having somebody with the experience and the judgment and, frankly, the relationships on Capitol Hill that President-elect Joe Biden has. He knows his mind on China and he is going to carry forward a strategy not based on politics and not based on being pushed around by domestic constituencies, but based on the American national interest.

It’s a clear-eyed strategy. It’s a strategy that recognizes that China is a serious strategic competitor to the United States, that they act in ways that are at odds with our interests in many ways, including in the trade realm that we were talking about before, but others, too. It is also a strategy that recognizes that there are areas where we will work with China when it’s in our interest to do so on issues such as climate change. And so Joe Biden is going to work hard to invest in our sources of strength here at home so that we can more effectively compete with China on technology and economics and innovation.

More effectively invest in our alliances so that we’re building up leverage to be able to shape China’s choices going forward and to be present in international institutions so that it’s the United States and our partners and not China who is calling the shots at the key tables on issues ranging from nuclear proliferation to international economics.

The Trump administration walking away from those tables has given China a golden opportunity to advance its agenda in the world. So this is the approach that we intend to take. It’s an approach rooted in a clear assessment of the challenge we face, a clear assessment of America’s national interests, and what our sources of strength are that we can bring to bear in this competition.

ZAKARIA: And just, finally, and returning to the top, are you going to then waive or reverse the tariffs on our European allies and on Canada, for example?

SULLIVAN: Well, this comes back to the point I was making earlier about not having had the chance to consult with them, to work them. Our goal is to go out right away and sit down not just on the question of China, but to work out the economic differences that we have so that we can end the multifront trade war that the Trump administration started. And we intend to do that work right out of the gate in the early days and weeks of the administration.

line

Key Takeaways
 
  • There was no indication from Sullivan that Biden would get rid of the existing Section 301 tariffs on China, who focused instead on improving trade relations with “like-minded” allies as a way to more effectively resolve outstanding issues with China that are far from unique to the United States.
  • Though critical of Trump’s “multifront trade war,” Sullivan also did not promise that Biden would scrap the contentious Section 232 steel and aluminum tariffs on allied countries such as the European Union, only vaguely stating that the new administration would “work out the economic differences that we have.” 

line

Sign Up for Trade News, Compliance Updates and More