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Katherine Tai to Business Roundtable: Lobbying For Tariff Removal Won’t Work

February 23, 2021

By Kenneth Rapoza, CPA Industry Analyst

Katherine Tai reportedly gave the Business Roundtable some clues as to where Biden's tariff policy is heading.

Potential new US Trade Representative, Katherine Tai, reportedly told the Business Roundtable that lobbying for tariff removal won’t work, at least for the time being.

She said companies keen to keep the phase one trade deal need to be prepared to live with tariffs. Her assessment offers a glimpse of her views on China and trade policy as she heads to her Senate confirmation hearing on Thursday. We will be watching.

We expect her to largely continue in the footsteps of the previous administration, with a focus on labor and environmental regulations and price gaps that almost always favor China – and other developing nations – over the US.

If confirmed, and we view this as highly likely (no Biden appointees were rejected yet), Tai will be at the center of an ongoing trade reset that has moved from tariffs to tech bans to human rights matters singling out the Uyghur detention centers in Xinjiang. The US-China relationship is expected to get even more contentious in the years ahead, unless the Biden administration reverses course as China vies to become the unipolar power in the coming decades. A course reversal is what groups like the US Chamber of Commerce are hoping for, along with numerous industry specific import trade groups that are entangled with Chinese suppliers. The Bloomberg crowd is also keen on ending the trade war, or at least putting a lid on it.

So when Tai told the Business Roundtable, which shares the interests of the US Chamber of Commerce and global business in general, that they may be disappointed if counting on a tariff rollback, we see that as a positive.

Tai, who won multiple big cases against China as a trade lawyer during the Obama/Biden years, will be unwavering in negotiations with Beijing, according to former colleagues.

“She knows where the bodies are buried,” said Eric Altbach, a consultant and former colleague of Tai’s, referring to previous trade negotiations. “The Chinese rightfully expect her to be really tough,” Altbach said in a story by Bloomberg on Tuesday.

Tai is not personally close with Biden, like other Cabinet officials are. That’s raised questions about how much influence she’ll have on shaping economic policies broadly, with global business interests hoping she is more like a prop for globalist liberals and free trade conservatives, rather than a battle ax like Robert Lighthizer.

But Tai is more like Lighthizer than Michael Froman, the globalist trade ambassador that served under Obama and negotiated the Trans Pacific Partnership. So far, the Biden administration has kept the 232 tariffs on steel and aluminum, kept the section 301 tariffs on China, and refused to allow the appointment of new WTO judges. The combination of Tai, Chief of Staff Nora Todd, WTO-skeptic Mark Wu, and currency expert Brad Setser means that this USTR will not be the same as the pre-Trump agencies under Clinton, Bush and Obama.

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