WASHINGTON: US Treasury Secretary Janet Yellen expressed doubts about last year’s trade deal with China, the first clear statement from the Biden administration detailing its thinking about the future of the agreement between the world’s two largest economies.
“My own personal view is that tariffs were not put in place on China in a way that was very thoughtful,” she told the New York Times in an interview as she returned to the US last week. “Tariffs are taxes on consumers. In some cases it seems to me what we did hurt American consumers, and the type of deal that the prior administration negotiated really didn’t address in many ways the fundamental problems we have with China.”
Eighteen months on, the agreement has turned out to be a truce at best, with both sides continuing to pay more for many imports. But it is also an area of stability in a relationship that has continued to deteriorate, with rising tension over Hong Kong, Taiwan, human rights and the origins of the Covid-19 pandemic.
For its part, the Chinese government has mostly praised the trade deal, even as it has criticised US actions and statements in other tense areas.
“The first phase of the agreement is good for China, good for the US, and good for the whole world,” Ministry of Commerce spokesperson Gao Feng told reporters last week in Beijing.
But even before Ms Yellen’s remarks, some in China were pessimistic about the future of the agreement.
“The current relative calm on the trade front does not seem to portend glorious days, but thunderstorms,” former diplomat and trade official Zhou Xiaoming wrote last week in an editorial. “Although it is still reviewing its stance toward China,” the Biden administration can be expected to act more decisively and aggressively later this year, he wrote.
US exports to China hit a record in the first quarter of the year, but imports from the mainland have soared, boosted first by masks and protective gear, then by electronics and work-from-home equipment, and now by the rebound in general consumption as the economy opens up and people spend their stimulus money.
Purchasing targets agreed to by China expire at the end of the year, and China is well behind where they promised they would be now, although the total should rise as agricultural goods it has bought are harvested and delivered.
The two sides also agreed that China’s purchases would continue to rise from 2022 to 2025, although no details were made public.
Whether that is enough for the US remains to be seen. US Trade Representative Katherine Tai in May pledged to build off the deal and said that removing tariffs will depend on the outcome of upcoming conversations with China.
Since starting her job, though, Ms Tai has had just one phone call with her counterpart, head Chinese negotiator Vice-Premier Liu He.