Source: Blog – Alliance for American Manufacturing

U.S. Trade Representative Katherine Tai speaks during a recent event sponsored by Semafor. Photo by AAM

There’s two competing factions within the Biden administration when it comes to trade with China. Which one will win out in 2024?

The Biden administration is reportedly considering increasing tariffs on Chinese electric vehicles and other imports in the coming year, signaling a shift in the power struggle between the two factions guided U.S.-China trade policy in 2023.

U.S. Trade Representative (USTR) Katherine Tai has represented one side, arguing the administration’s “worker-centric” trade policy must take precedence over increasing market access. For her, tariffs are critical means of rebalancing a “tilted” global economy. But a faction led by Treasury Secretary Janet Yellen reportedly argued that Section 301 tariffs should be reduced for the sake of bettering the U.S.-China relationship.

The fight over Chinese tariffs pre-dates the Biden administration, and goes back to 2018. That’s when the Trump administration first applied Section 301 tariffs on Chinese imports to counter Beijing’s longstanding lack of intellectual property theft protections and use of forced technology transfers.

Since taking office, President Biden has sustained these tariffs. But opponents of the tariffs have waged a vocal campaign to lift them, and there’s plenty of misguided folks in D.C. circles who want to go back to the old status quo.

Lifting them would be a mistake. A March 2023 report from the United States International Trade Commission showed that both Section 301 and 232 tariffs galvanized a significant domestic production resurgence in the tariffed industries that the commission studied. Furthermore, the USTR’s 2022 Report to Congress On China’s WTO Compliance found that China’s state-led, non-market policies and practices continue to hurt U.S. workers and businesses and calls for trade tools, such as tariffs, to counteract this market distortion. And in November, Sens. Sherrod Brown (D-Ohio) and Bob Casey (D-Pa.) penned a letter to President Biden, urging him to not reduce Section 301 or Section 232 tariffs.

“These tariffs are essential to level the playing field for American workers to compete and counter unfair trade practices by China, which seeks to circumvent our trade laws, steal American technology, and cheat and bully its way to global economic dominance,” the senators wrote.

All of this is coming to a head in 2024. A mandatory four-year review of Section 301 has long been awaited, and it appears that Team Biden may implement increased tariff rates for Chinese EVs, solar products, and battery packs, The Wall Street Journal reported. These raises would target bolstering U.S. clean energy industries that have begun to grow with investments from the Inflation Reduction Act.  

Meanwhile, China is preparing to flood the global market with its state-subsidized EVs, inspiring the European Union to consider tariffs as well. And, China’s solar panel production cost dropped by 42% in the last year, delivering a cost advantage that poses an enormous threat to U.S. industry.

“China has not yet reformed its practices and we cannot afford to capitulate to its recalcitrance,” our own President Scott Paul wrote in comments submitted to the USTR in 2022. “This is a long-term process that will require a sustained, bipartisan commitment on the part of all U.S. policymakers, including both the current and future administrations.”

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