US set to raise stakes in trade war with China

US Trade Representative Katherine Tai says Beijing had broken promises to trade fairly and transparently.

Katherine Tai will laid out how China has ‘doubled down on authoritarian’ and ‘harmful’ trade practices. Picture: AFP

The US has accused China of breaching promises to trade fairly and transparently, leaving the door open for a dramatic escalation of the trade war that emerged between the two superpowers under Donald Trump should Beijing – as the White House expects – ­ignore America’s demands.

In a speech on Monday in Washington, US Trade Repre­sentative Katherine Tai, a member of President Joe Biden’s cabinet, laid out how China has “doubled down on authoritarian” and “harmful” trade practices that have “hurt American workers and businesses and given Beijing an unfair advantage in the global trading system”.

“The United States will defend itself, using all available tools, from state-directed industrial policies that harm our workers, producers, and overall economic interests,” a senior White House official said before the speech, leaving “all options” on the table.

The comments will inflame relations between Washington and Beijing, which have deteriorated steadily in recent years since Chinese President Xi Jinping determined the emerging communist superpower would play a more assertive role and extend its influence over neighbouring nations, through economic and diplomatic means.

Mr Biden and Mr Xi held their second telephone call early last month in a bid to stabilise relations between the two nations amid disagreements over trade, technology and human rights.

“While we would welcome China changing the practices that do harm to American firms and workers, we recognise that China simply may not change and that we have to have a strategy that deals with China as it is, rather than as we might wish it to be,” the spokesman added.

The comments by the White House came as the State Department said it was “very concerned” about China’s “provocative military activity near Taiwan, which is destabilising, risks miscalculations, and undermines regional peace and stability”. “The US commitment to Taiwan is rock solid and contributes to the maintenance of peace and stability across the Taiwan Strait and within the region,” State Department spokesman Ned Price said.

The speech foreshadows the release of a new US trade policy ­toward China following months of consultation with businesses and unions. The Trump administration put tariffs on nearly $US370bn in imports from China beginning in 2018, which the Biden administration has yet to touch.

“The current state of this trade relationship does not meet the needs of American workers, businesses, farmers, and producers,” the official said. The US will introduce a “targeted tariff-exclusion process” to encourage China to comply with a Phase One agreement signed between China and the Trump administration in January 2020.

Business groups have been pressing the Biden administration for clarity, including whether the White House planned to start negotiations with Beijing on a follow-up and on whether tariffs on Chinese imports would continue.

“Ambassador Tai intends to have frank conversations with her counterpart in China about China’s performance under the phase one agreement,” the official said, suggesting the conversation would occur “soon”.

China has progressively alienated the US and Australia in the Asia-Pacific region, pursuing an increasingly aggressive foreign and trade policy that has included punishing Australian exports such as coal, wine, seafood and barley. “The US is not the only country being harmed by China’s unfair trade practices,” the official said, stressing the US was working with allies via the G7 and the Quad group of nations, which ­includes India and Japan.

Scott Morrison flew to Washington last month for in-person meetings, a forum increasingly seen as a bulwark against Chinese aggression.

The White House also took aim at the Trump administration’s “chaotic” approach to dealing with China. “It really did not build on our strengths, whether that was at home or with our partners and allies … unlike his predecessor, President Biden is going to hold China to account where China is falling short of its commitments,” the official said.

“President Biden is putting an end to the previous administration’s approach that alienated ­allies and weakened the global market for American workers.”