The US and China’s top trade negotiators have held talks, their first since President Joe Biden took to the Oval office, though analysts suggest the new administration is unlikely to ease the pressure on the trade relationship this year.

As reported in The Guardian, the Chinese commerce ministry said that US trade representative Katherine Tai and Chinese vice-premier Liu He held “candid, pragmatic and constructive exchanges with an attitude of equality and mutual respect” during a virtual meeting last week.

The Office of the United States Trade Representative (USTR) says that Tai discussed the “guiding principles of the Biden-Harris administration’s worker-centred trade policy and her ongoing review of the US-China trade relationship, while also raising issues of concern”.

Tai’s office didn’t specify the problem areas brought up on the call, but the Biden administration has previously voiced many of the same grievances as those made under former President Trump.

In its 2021 trade agenda, delivered by the USTR to Congress in early March, the administration pointed to “detrimental actions” taken by China, including tariffs and non-tariff barriers on US exports, government-sanctioned forced labour programmes, “unfair subsidies” and infringement of American intellectual property.

The paper added that the new regime is “committed to using all available tools to take on the range of China’s unfair trade practices that continue to harm US workers and businesses”.

Prior to her call with the Chinese vice-premier last week, Tai also told Reuters that the US still faces “very large challenges” in its trade and economic relationship with China that require the Biden administration’s attention across the board.


Status quo

Despite the opening of trade discussions with China, analysts suggest that the Biden administration will likely maintain the status quo and stick with Trump-era trade policies in the immediate term.

William Reinsch, a senior advisor at the Center for Strategic and International Studies (CSIS), a Washington DC-based think tank, tells GTR that the White House has been conducting a review of its approach to China across various parts of government, as well as a specific assessment of its trading relationship with its rival superpower.

But Reinsch says Biden has given no time limit for when either review might end, and adds: “It’s my view these could go on for a while, because they don’t have any incentive to change their policies towards China currently.

“China doesn’t want to have a negotiation in which the American side comes in and makes the same demands as those put forward by Trump, and Biden doesn’t want a negotiation that is going to fail. The Chinese are not going to do what the US wants them to do, so if you have a negotiation in which they say no, that’s going to expose him [Biden] to criticism from the Republicans.”

While the US-China trade review goes on within the White House, the new president has left in place tariffs imposed during the Trump administration on more than US$350bn-worth of annual Chinese imports.

According to research put out by the Peterson Institute for International Economics (PIIE) in March, there are currently tariffs on the majority of goods being shipped from China into the US, and at roughly 19%, the average tariff rate is more than six times higher than before the outbreak of the trade war in 2018.

At the same time, Tai has vowed not to tear up the Trump-era phase one trade agreement.

Reuters reported in early May that Tai, speaking at an online event, said: “It’s the agreement that we have, it’s the agreement that we will work from, that we will build from.”

According to the news agency, Tai also said that any withdrawal of tariffs on imports from China would hinge on the conversations with Chinese officials and the “effectiveness” of the phase one deal.

For all the talk of Biden maintaining the status quo, in some instances the new president has shown a willingness to take on China in the trade arena.

In recent months, Washington has clashed with Beijing over issues such as forced labour in Xinjiang and the use of American technology by companies with links to the Chinese military.

For instance, in April, the Department of Commerce added seven supercomputing firms to a blacklist for their ties to Chinese military modernisation, barring American companies from exporting technology to the firms without prior approval.


China’s phase one performance?

While Tai has said the new administration will continue to build on the phase one agreement, analysts have suggested that China is still falling short of import targets outlined in the deal.

After Trump kicked off a trade war with a first round of levies on Chinese goods in July 2018, the US and China exchanged tit-for-tat tariffs over the course of the next 18 months until formally signing a phase one trade agreement in January last year.

As part of the agreement, which Trump claimed to be “very large and comprehensive”, the US agreed to reduce tariffs on certain Chinese goods.

China promised in return to expand purchases of certain US goods and services by a combined US$200bn over 2020 and 2021, compared to 2017 levels, while also vowing to address some of the Trump administration’s concerns about intellectual property practices.

PIIE analysis says that in 2020, China failed to meet targets set out in the phase one deal by roughly 40%, with imports of covered products totalling only US$99.9bn last year.

However, agriculture lobbying group, the American Farm Bureau Federation, says in a report released last week that while China is “still behind on phase one,” it’s “catching up quickly”.

According to the organisation, China was supposed to purchase roughly US$33bn in agricultural products last year, but fell short by US$6.15bn.

While the Asian country is 22% behind on its 2021 commitments for the first four months of the year, AFBF says that purchases are “coming on strong”.

It adds: “While being behind the goal seems like bad news, US agricultural exports, relative to the phase one commitments, are in much better shape in 2021 than they were over the same period in 2020. Cumulative January through April 2020 exports were 60% below the cumulative total that would have been needed to achieve the 2020 target.”