Trade war flame throwing has given way to a new kind of tough talk on China under the administration of U.S. President Joe Biden.
After months of reviewing the U.S.-China trade relationship — when Washington pushed through pandemic-focused measures and worked on the nation’s infrastructure — U.S. Trade Representative Katherine Tai sought to reset the conversation with China in an address on Monday.
Trade with China remains a key topic for the industry — particularly with importers still paying trade war tariffs on apparel made in the country. Tai said the USTR’s office will start a “targeted exclusion process” that would remove tariffs on some types of goods, but apparel was not specifically mentioned.
China is the largest exporter of apparel to the U.S., accounting for 36.9 percent of the market valued at nearly $17 billion for the 12 months ended July 31, according to Commerce Department data.
Still, fashion is just part of a much larger economic equation that also includes steel, semiconductors, the treatment and detainment of the Uyghur people in Xinjiang and more.
“The U.S.-China trade and economic relationship is one of profound consequence,” Tai said at the Center for Strategic and International Studies in Washington. “As the two largest economies in the world, how we relate to each other does not just affect our two countries, it impacts the entire world and billions of workers.”
While not in the fiery rhetoric that former President Donald Trump preferred, Tai’s speech still emphasized more stick than carrot when it came to China.
“For too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world,” she said. “In recent years, Beijing has doubled down on its state-centered economic system. It is increasingly clear that China’s plans do not include meaningful reforms to address the concerns that have been shared by the United States and many other countries.
“We have a lot of work to do,” she said.
In addition to excluding some goods from trade war tariffs, Tai said that work starts with:
- Engaging China to make sure it keeps its agreement under the “Phase One” trade agreement Tai inherited.
- Addressing China’s “state-centered and non-market trade practices.”
- Working with allies to “shape the rules for fair trade in the 21st century, and facilitate a race to the top for market economies and democracies.”
“We need to take a new, holistic and pragmatic approach in our relationship with China that can actually further our strategic and economic objectives — for the near-term and the long-term,” Tai said.
It’s a general approach that is tied into the Biden administration’s plans to also make America more competitive by upgrading its infrastructure. It has a little bit of everything — some tariffs cuts, holding China’s feet to the fire to make sure it keeps its Phase One promises and then addressing broader concerns that cut to the heart of how China operates.
There are real questions over how much China really will change, especially since it is in the process of cracking down on some of its citizens’ more Western impulses — like celebrity culture.
But the tone and the process — following months of internal mulling — marks a night and day change from the last administration’s go it alone and fly by the seat of its pants approach.
“Our goal is to bring deliberative, stable, long-term thinking to our approach — and to work through bilateral and multilateral channels,” Tai said. “The core of our strategy is a commitment to ensuring we work with our allies to create fair and open markets.”
American Apparel & Footwear Association president and CEO Steve Lamar was looking for something more.
“At a time when industry is struggling with an unprecedented supply chain crisis due to our crumbling infrastructure, economic fallout from a damaging pandemic, and unprecedented freight costs, it is distressing that the administration has chosen to continue to subject U.S. companies to these damaging taxes,” Lamar said. “Although restarting an exclusion process is an important step forward, the far better course would have been to discontinue use of these tariffs entirely.
“The tariffs currently being imposed on clothing, footwear, and travel goods were part of a failed trade war strategy,” he said. “As we have learned during the past couple years, trade wars are not ‘good and easy to win’ and, in fact, such tariffs are hurtful to American consumers, American workers, and American business.”
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