The Trump administration put trade at the center of its fractious relationship with China, aggravating companies and roiling markets in a bid to force concessions from its chief economic rival.
The Biden administration is deliberately flipping the script, putting off discussions about tariffs and export controls until Beijing addresses other economic and national security concerns.
It’s a turnaround that gives the U.S. leverage against China as the Biden administration enters its first in-person meetings with senior Chinese officials, a gathering in Alaska on Thursday led by Secretary of State Antony Blinken and national security adviser Jake Sullivan.
Chinese officials and multinational companies have been pushing for a rapid easing of trade tensions. Instead, the White House is signaling to Beijing that future conversations about trade will happen in concert with foreign allies and only come after China shows progress on issues like climate change and human rights.
Senior officials argue the U.S. needs a stronger domestic economy and tighter bonds with allies before it can hope to force meaningful concessions from China on behaviors like government subsidies, product dumping and intellectual property theft.
“It’s the absence of rushing into inking a [trade] deal that I think says the most about how we’re thinking about trade policy,” Daleep Singh, the deputy national security adviser, said in an interview.
“We’re not measuring our trade policy by the number of trade deals that we sign,” he added. “Trade deals are not the only way, in my mind, to create deep economic and security partnerships.”
That thinking matches a broader view among top administration officials that trade should advance U.S. national security interests by uplifting the American middle class and making the domestic economy more competitive. Interim national security guidance released recently by the White House asserts that “in today’s world, economic security is national security.”
“Everything we do in our foreign policy and national security will be measured by a basic metric: Is it going to make life better, safer and easier for working families? So, of course, that means a different approach to trade policy,” Sullivan said at a press briefing in February.
But the Biden approach of interweaving U.S. trade, foreign and national security policies, especially toward China, will require an unprecedented level of coordination between national security and trade officials, said Scott Kennedy, a senior adviser and China expert at the Center for Strategic and International Studies.
“It would be a significant departure, not just from the last four years, but from the last 30,” Kennedy said
Turning policy into action
The Biden administration’s shift in outlook on trade has not been lost on former government officials, many of whom are now eagerly anticipating how Sullivan, the newly confirmed U.S trade representative, Katherine Tai, and others actually translate it into action.
The foundation is already being laid to rebuild relations with key allies in order to form alliances against China and other rivals.
“It’s quite clear that the national security questions are going to be, if not the dominant consideration, at least a very, very important consideration in the shaping of how trade policy is executed for China,” said Kurt Tong, a partner at The Asia Group and former senior diplomat in Hong Kong, Macao and Japan. “And that, I think, sets it apart from both the Obama administration and the Trump administration.”
But getting agencies to not only settle on the same playbook but to coordinate when making the calls adds time and complexity to trade processes that are inherently bureaucratic.
“I think a challenge will be, how do you actually operationalize bringing these two sides of the administration together? Not just like once a month to review what they’re doing, but to really talk and jointly develop policies that work and take the concerns of the middle class into account,” said Wendy Cutler, vice president at the Asia Society Policy Institute and a former acting deputy U.S. trade representative.
That’s especially true when the National Security Council and State Department are stocked with executive branch veterans and Biden confidants, while USTR has plucked many of its senior leaders from Capitol Hill. Tai previously served in the USTR office, but was most recently chief counsel on the House Ways and Means Committee.
“Now they’re going to be like everyone going to the same school,” Tong said. “They might have come from different blocks on the street in town, but now they’re going to have to spend a lot of time together.”
Singh, who also serves as deputy director of the National Economic Council, said the administration is “absolutely going to work as a team with full collaboration and transparency in everything we do related to trade.”
Policy years in the making
The Biden administration’s strategy is one that Sullivan and others have been contemplating in recent years: one that frames trade as a tool to improve wages and job opportunities for the middle class and advance national security goals.
In essays and other writings, for instance, Sullivan has proposed that instead of treating defense, diplomacy, development, trade, investment and technology as distinct, they should be wrapped into a single national security budget that allows the U.S. to redirect resources as needed.
In 2019, he and Kurt Campbell, now the Indo-Pacific coordinator, also suggested in Foreign Affairs that the U.S. needed to convene democracies to create a new international system “layered over” the World Trade Organization in order to address global trade differences the body hasn’t resolved, such as state-owned enterprises and digital trade.
Sullivan and other now-senior administration officials have also concluded that past trade deals simply failed to deliver as promised — a conclusion they share with the Trump administration, even if they disagree on the right policy response.
“There’s a lot of evidence of the concentrated geographic harm in previous trade deals to jobs and wages, not just for the people who work in the industries directly affected by trade, but also the communities as a whole,” Singh said in the interview. “So, we’re mindful of that.”
The most consequential policy missive was a 90-page report last fall, coordinated by the Carnegie Endowment for International Peace, that outlined ways foreign and trade policies should be modified to uplift the middle class. Sullivan was among the report’s 11 contributors. Salman Ahmed, who led the task force behind the report, is now director of policy planning at the State Department, a post Sullivan once occupied.
“Whether it’s dumping or subsidies or intellectual property theft, or the countries across the world who have engaged in problematic currency practices, our priorities in the trade space will be about the American worker,” Sullivan said soon after assuming his new job.