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Shift in Sino-U.S. dialogue: How to protect U.S. economic interests

While pressing China to live up to its trade commitments, the United States will focus increasingly on how to defend its economic interests in dealing with an unreliable partner, said U.S. trade representative Katherine Tai. China and the United States are the two largest economies in the world and their overall relationship is “profoundly consequential,” said Tai on the closing day of USDA’s annual Outlook Forum.

The Biden administration opened discussions with Beijing last fall with a four-part strategy that included a review of China’s performance under the “phase one” agreement that de-escalated the Sino-U.S. trade war, and its “serious concerns about China’s state-centered and non-market trade practices that were not addressed in the phase one deal.” The strategy called for targeted tariff relief for some U.S. businesses and discussions with allies on a unified approach to China.

“I will share with you and all of our stakeholders that these have not been easy conversations (with China). And in fact, they have gotten more difficult over time,” said Tai during a “fireside chat” with Agriculture Secretary Tom Vilsack. “So that doesn’t change the overall aspects of this trade relationship, which is profoundly consequential but also extremely difficult and getting more difficult.

“In the months forward … we will continue to press China on the impact of its policies on our producers and increasingly focus our conversation around how we can adapt to a world where we would like for China to play by our rules but we cannot make decisions for China, and what we need to do on our behalf to defend the interests of our economy and our stakeholders and including very much our agricultural stakeholders,” said Tai, who returned recently from meetings with European allies.

The “phase one” agreement of 2020 called on China to buy tens of billions of dollars worth of U.S. goods and services over two years. But it bought only 57% of the target. Agriculture was one of the sectors in which China performed much better, with purchases that were 83% of the goal. At the end of 2021, when phase one expired, U.S. exports to China were $3 billion higher on an annual basis than they were in 2017, the baseline for tracking trade, said the Peterson Institute for International Economics.

Although it missed its target for food and ag imports, China regained its status as the No. 1 export customer in the past two years. U.S. ag exports tumbled to $10.1 billion in fiscal 2019, during the worst of the trade war, before rising to a record $33.4 billion in fiscal 2021. They are forecast by USDA for $36 billion this year.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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