What can the US do to rebalance its trade relationship with China?

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The US has announced a new 'supply chain strike force' to address trade imbalances with China and improve access to key imports for its manufacturers.


Almost six months on from the inauguration of Joe Biden as US president, the trade war between the country and China that was ramped up under his predecessor Donald Trump shows few signs of easing. 

Tariffs implemented under the last administration are still in place and a 'phase one' agreement to ease tension by China increasing its US imports has been hindered by the COVID-19 pandemic.

As a result, the view in the US is that the trading situation between the world's two largest economies remains difficult. 

Speaking at a meeting of Asia-Pacific trade ministers earlier in June, US trade representative Katherine Tai said: "It's a relationship in trade that has been marked by significant imbalance - that is in terms of performance, but also in terms of opportunity and openness of our markets to each other."

She therefore emphasized that it will be a key goal of the US to restore balance to this relationship in the coming months and years. So how is Washington planning to go about this?

A new 'strike force'

At the heart of the US' efforts will be a new 'supply chain trade strike force' announced by the Biden administration earlier this month. This is to be led by Ms Tai and will look for specific violations that are harming US supply chains, which could be addressed through tariffs or other remedies.

It will also seek to determine how best to remove bottlenecks that restrict trade in sectors such as electronics, construction and transportation.

The move comes after an earlier review of the US' access to critical equipment such as medical supplies, semiconductors and rare earth minerals. The US is heavily dependent on Chinese imports for all these goods, which are essential components for its manufacturing sector.

Jared Bernstein, an economic adviser to Mr Biden, told Reuters: "We're trying to understand all of the logistics behind the supply chain. One of the best ways to do that is to talk to people in the industry and we're doing a lot of that."

Some analysts have suggested the new strike force highlighted a tougher approach to China. Shi Yinhong, an adviser to China's State Council, told the South China Morning Post: "Compared to the Trump administration, the Biden administration's policy toward China since taking office has been more aggressive, especially in the hi-tech sector. The specific measures have become more and more detailed and comprehensive."

A more collaborative approach?

One way in which the Biden administration has broken from the tactics of the previous administration has been to abandon the 'go it alone' doctrine of Mr Trump in favor of closer collaboration with allies, especially those in Europe and Asia-Pacific. 

For instance, this week Mr Biden has been meeting with EU leaders in Brussels, where he was keen to emphasize the growing threat posed by China and to get European nations on board with a more coordinated approach to global trade issues.

One step has been to cool long-running tensions related to aircraft subsidies, with both sides agreeing to suspend retaliatory tariffs related to this issue, in order to focus more closely on China.

Ms Tai said: "We are finally coming together against a common threat. We agreed to work together to challenge and counter China's non-market practices in this sector in specific ways that reflect our standards for fair competition."

The US is also looking to engage more closely with allies on reforms to the World Trade Organization, which could restore the body's dispute resolution mechanisms and tackle issues such as government subsidies for industry - something which plays a key role in Beijing's economic strategy.