Barring something unforeseen, Katherine Tai will become Joe Biden’s U.S. trade representative (USTR), the cabinet-level position that is responsible for U.S. trade negotiations and overall policy. Yesterday, the U.S. Senate Finance Committee unanimously approved her nomination and it will now go to the full senate for a final confirmation vote.
Democrats and Republicans alike have spoken highly of her good natured, straightforward style coupled with her policy-wonk knowledge as a long-time trade lawyer. However, the global trading world is in real trouble and the job won’t be easy. As part of confirmation hearings, Ms. Tai has answered a variety of questions (both written and in hearings). Here are three takeaways from these proceedings as well as from other recent pronouncements from the Office of the USTR.
1. It’s status quo on trade with China
For now, there is virtually no difference between Ms. Tai’s views on China and those of the ‘tough on China’ Trump administration. In a written statement to the House Finance Committee, she agreed that tariffs needs to remain on Chinese goods “responsive to China’s practices” and that China must live up to the deal it made under Trump. And she stated bluntly that tariffs were a “legitimate tool” for the U.S. government. Its official: The Trump trade doctrine has bipartisan support and is now bedrock U.S. trade policy.
2. Is a carbon border tax coming?
Earlier this week, the Biden administration issued its proposed trade agenda and it includes a “carbon border adjustment” which would impose import duties on countries that don’t have a carbon tax. The Biden administration says this is part of its plan to reduce greenhouse gas emissions and get to net-zero global emissions by 2050. While the proposed measure again appears to be targeted at China, like Buy American policies, there are bound to be unintended consequences that will have to be watched closely by all of America’s trading partners.
3. U.S. protectionism is here to stay
With one of the strictest Buy American policies on record, coupled with the political reality of not being able to afford alienating the swing states throughout the Rust Belt that flipped Democrat to give Biden the presidency, no one should expect the U.S. to be a global champion for free and open trade anytime soon. As always, the U.S. government will support free trade when it’s in the interests of their own exporters, but the “America First” policy outlook of the Trump administration is here to stay. In fact, as the Biden administration moved quickly to reverse many key Trump policies, it has left the Trump trade doctrine virtually untouched. While some stylistic differences are being put in the window, the document released this week by the Office of the USTR could have easily be released under Robert Lighthizer, Trump’s point man on trade. Staying tough on China will be job number-one for the Biden administration and its new USTR. Ms. Tai appears up to the task but only time will tell.