Updates between the US and China
Join myFT Daily Digest to be the first to have news about the US-China relationship.
Senior US officials are discussing whether they want to start an investigation into the use of industrial subsidies in China, in a move that could cause an increase in trade tensions between Washington and Beijing.
The talks in the administration of Joe Biden could eventually lead to America imposing a new round of punitive tariffs on products from China, although such a step is still a long way off.
According to people familiar with the matter, Katherine Tai, the U.S. Trade Representative, and Gina Raimondo, the U.S. Trade Secretary, are considering launching an investigation into China’s subsidies under Article 301 of the 1974 Trade Act.
This is the same legal framework that the Donald Trump administration used to impose tariffs on $ 360 billion of China’s products during his time in the White House. The USTR Office, the Department of Commerce and the White House declined to comment. Bloomberg News first reported that the Biden administration is considering such a move.
A decision to open a new inquiry into unfair trade practices by China would be the result of growing frustration from the Biden administration that Beijing has not fundamentally turned away in recent years from its heavy use of industrial subsidies around strategically important sectors to support.
The merchant state struck between Trump and Xi Jinping, China’s president, in January 2020 did not include any major and enforceable commitments from Beijing to change its industrial subsidies, leaving it a major source of tension in the economic relationship.
Since taking office this year, Biden has Trump retains tariffs despite pressure from U.S. business groups to reduce or eliminate it to ease costs for U.S. importers. A decision to launch a new trade investigation against Beijing suggests it is moving in the opposite direction.
This week Biden kept only his second phone call as president with Xi, trying to restore their relations after U.S. officials concluded that lower-level engagement was not making sufficient progress.
According to the White House report on the call with Xi, Biden “stressed the continued interest of the United States in peace, stability and prosperity in the Indo-Pacific and the world, and the two leaders emphasized the responsibility of both countries to ensure that competition does not end up in conflict ”.