US Will Enforce Phase One Trade Deal With China, Revive Tariff Waivers for American Companies

Several American business associations earlier expressed concerns about the Biden administration's decision to keep tariffs on billions of dollars worth of Chinese goods in effect. They claimed that the heavy duties are hurting US businesses already suffering from transport system disruptions.

US Trade Representative Katherine Tai will be revealing a new shift in Washington's policy towards China, namely the White House plans to hold Beijing accountable for not respecting the Phase One deal signed under President Donald Trump, Tai's press office has stated. The trade representative is expected to deliver this news during a speech at the Centre for Strategic and International Studies on 4 October.

"Today, I will lay out the starting point of our administration's strategic vision for realigning our trade policies towards China to defend the interests of America's workers, businesses, farmers and producers, and strengthen our middle class".

Katherine Tai

US Trade Representative

Tai is expected to point out Beijing's perceived failure to respect certain provisions of the Phase One deal, namely in terms of buying products from American agricultural companies. The US will be holding China accountable for this, according to the released speech by the trade representative. Per a recent report by the Peterson Institute for International Economics, China only bought 62% of the volume of American agricultural products outlined in the Phase One agreement as of August 2021.

In addition, Tai will be stressing the "serious concerns" that the US has regarding the "state-centered and non-market trade practices" that China is resorting to. According to her planned speech, Washington will "raise these broader policy concerns with Beijing". However, per a CNBC report, citing a background call by US officials, Washington is not planning to negotiate a Phase Two trade agreement with Beijing.

US Companies Seeking Waivers From Trade War Tariffs

The Phase One trade agreement with China signed by President Donald Trump was the first step in ending the very trade war he started in 2018. The negotiations were to continue afterwards to address other issues that Washington had concerning Beijing's economic practices, but they never took place due to Trump's loss in the 2020 election.

As a result, US tariffs, targeting billions of dollars worth of Chinese goods, implemented by the Trump administration during the trade war, remained in effect. The Biden administration did not lift them, taking a pause to review Trump's trade policies. The Democratic administration also failed to prolong tariff waivers, which many US businesses importing Chinese goods managed to obtain based on the unique nature of certain affected wares.

A group of four US business associations expressed concerns over tariffs remaining in place, claiming that they are hurting American companies, who've already faced increased expenses due to the current disruptions in the US transport system. The associations suggested that the Biden administration should either abolish the tariffs or at least revive the practice of issuing waivers to limit the impact of duties, which can reach as high as 20%. According to Katherine Tai's planned speech, Washington plans to return to issuing waivers to some for critical items.