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Biden Administration Weighs Action on Chinese Subsidies, New Tariffs

The Biden administration is considering an investigation into Chinese subsidies that could bring new tariffs, The Wall Street Journal reported Friday.

Citing unnamed sources, the Journal noted that United States Trade Representative (USTR) Katherine Tai is at the same time seeking to determine which current tariffs are hurting the U.S. economy with an eye to potentially making some cuts. For whichever tariffs do stay in place—the USTR reportedly isn’t planning a wholesale reduction on more than half of those imposed during Trump’s administration—officials are looking at reopening the exclusion process.

The news—also reported by Bloomberg and the Financial Times—came a day after President Joe Biden and Chinese President Xi Jinping held their first phone call in months. The White House characterized the conversation—the two leaders’ second since Biden took office—as a “broad, strategic discussion in which they discussed areas where our interests converge, and areas where our interests, values, and perspectives diverge.”

The reported movement on Chinese tariffs came after broad calls for the Biden administration to act. Just last month, the National Retail Federation (NRF), American Apparel and Footwear Association (AAFA) and Retail Industry Leaders Association, alongside dozens of other organizations, sent a letter to Tai and Treasury Secretary Janet Yellen reviving concerns over the ongoing burden of Trump-era China tariffs. Though they didn’t feature as prominently, concerns over state subsidies and the exclusion process were also included in the missive.

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According to The Wall Street Journal, the USTR’s office is also planning action on another issue named in the letter: the full implementation of Phase One commitments.

When China signed the Phase One agreement in January last year, it agreed to expand purchases of certain U.S. goods and services $200 billion above 2017 levels over the two-year period ending Dec. 31. So far, the country has consistently fell short of these promises.

Last year, China reached less than 60 percent of its purchase commitment, according to Chad Brown of the Peterson Institute for International Economics. As of the end of July, it was on track to hit less than 70 percent this year. Talks on these purchase commitments would precede action on subsidies, The Wall Street Journal reported.

In May, the USTR’s office took China to task for falling short on another aspect of the Phase One agreement: intellectual property (IP) rights. Though the agency acknowledged certain actions the country has taken to amend its IP laws, it asserted that “these steps toward reform require effective implementation and fall short of the full range of fundamental changes needed to improve the IP landscape in China.”