The United States is not going to cancel its additional tariffs imposed on Chinese goods despite Beijing’s call for their removal at recent top-level bilateral meetings in Beijing, but may try to make them more “strategic” after a review.
US Commerce Secretary Gina Raimondo told CNBC on Tuesday that the US Trade Representative (USTR)’s Office is conducting a four-year review on the Section 301 tariffs imposed by the Trump administration on imports from China. She said the tariffs could have been much more strategic.
“We didn’t put those tariffs in place. We don’t think they make a whole lot of sense in many cases,” Raimondo said. However, “I don’t think the [Biden] administration will make any changes until that review is completed.”
Deputy US Trade Representative Sarah Bianchi said in May that it would be reasonable to expect the completion of the ongoing review on the tariffs by the end of this year. On August 28, China’s Commerce Minister Wang Wentao expressed serious concerns about the Section 301 tariffs to Raimondo during their meeting in Beijing.
“The US Section 301 tariff measures against China have lasted for five years, seriously slowing the development of bilateral trade between China and the US, putting additional burdens on companies and consumers in the two countries, disrupting the global trade order and affecting the stability and security of the global economy,” Shu Yuting, a spokesperson of the Commerce Ministry, said on August 31.
“The World Trade Organization has clearly ruled that the US Section 301 tariffs violate WTO rules,” Shu said. “Cancellation of all additional tariffs on China is beneficial to both China and the US, as well as to the entire world.”
In 2018 and 2019, the Trump administration imposed tariffs on thousands of imports from China valued at some US$370 billion at the time after a Section 301 investigation found that China was coercing American firms to transfer sensitive technology to do business and misappropriating US intellectual property.
On September 3, Raimondo told media that the US will continue to sell billions of dollars of chips a year to China but the vast majority will not be of the cutting-edge variety.
“We are not going to sell the most sophisticated American chips to China that they want for their military capacity,” she said.
She said selling certain chips to China will ultimately generate revenue for American businesses to invest in further research and development (R&D).
A Hubei-based writer says in an article published by Henan Broadcasting System’s social media account on Wednesday that Raimondo’s comments may mean that there is room for China and the US to discuss the sanctions imposed by the Biden administration.
But he also opines that it’s difficult for Raimondo to eschew the influence of some anti-China US politicians.
“For a very long time, ‘anti-China’ has been the epitome of political correctness among politicians in Washington – to the point that all senior US officials who have recently visited Beijing have been required to take a tougher stance against China,” says the writer. “In this situation, the US government cannot make rational decisions, as senior officials are all controlled by the ‘anti-China’ public opinion they have created.”
That writer says the intensifying political fight between Republicans and Democrats will continue to affect America’s China policy.
Tit for tat: Beijing’s cards
On May 20, the Cybersecurity Review Office, a unit of China’s Cyberspace Administration, said China’s key national infrastructure operators are forbidden to purchase products from Micron Technology because the US chip maker poses network security risks. Some Chinese commentators complained that Micron refused to reinvest in China.
On June 16, Micron announced that it will invest $603 million over the next few years in its chip packaging facility in the city of Xian.
Chen Feng, a columnist at Guancha.cn, writes that Raimondo wanted China to complete the purchases of Boeing 747 Max airplanes that it had ordered and cancel its sanctions against Micron Technology but she has so far failed to achieve these goals.
Chen says China has gained bargaining power in the chip war against the US after Huawei last week launched its flagship smartphone Mate60 Pro, which uses its own Kirin 9000s chip. He says Huawei may have used the products of Empyrean, China’s electronic design automation (EDA) software maker, to design its high-end chip.
On August 28, Raimondo and Wang held a four-hour meeting in Beijing. Both sides agreed to set up a commercial issues working group and an export control enforcement information exchange platform.
Vice Premier He Lifeng told Raimondo on August 29 that he will make positive efforts to “deepen consensus and extend cooperation” between China and the US. It appeared that Beijing wanted to set aside the chip war and discuss other trade issues with the US at the time.
But on the same day, Huawei commenced sales of its Mate60 Pro. Research firm TechInsights said the handset’s central processing unit was made by SMIC with its N+2 technology.
Some analysts said TechInsights’s findings could prompt the US Congress to propose harsher curbs against China and push the government to strengthen its sanctions.
On September 5, US National Security Advisor Jake Sullivan said the US government wanted to know the exact details of the process in producing the Mate60 Pro before making further comments.
He added that the US curbs “focus on national security concerns, not the broader question of commercial decoupling.”
Read: SMIC bypasses US curbs to make 7nm chips
Follow Jeff Pao on Twitter at @jeffpao3