Bloomberg Audio Studios, podcasts, radio news.
It's the latest. This morning, President Biden calling for higher tariffs on Chinese steel in a bid to shore up the US steel sector. China slamming the potential restriction, saying the US is quote arbitrarily slapping tariffs on Chinese products. Ambassador Catherine Tie, US trade representative, joined us now from New York. Ambassador, wonderful to have you with us on the program. We've some called us done a role reversal. You're in New York and we're down in Washington. Will
make this work properly next time, Ambassador. This is a topic we've been talking about for a long long time, Chinese over capacity. We all know about the China shark. We all studied it an obliterated manufacturing basis in places like the United States of America. Can I just give you a few minutes just to sort of lay the ground for us. What's changed and what's new about what's developing right now?
Well, i'd be delighted to you. It's wonderful to be here with all of you. You're absolutely right about the China shok and it's become an established set of facts as we look back on the last several decades of
China's emergence as an economic powerhouse in the world. As you've seen the growth of the Chinese economy, what you've also seen is the negative impacts on other economies like that of the United States, and of course the industrial erosion that you've seen here the manufacturing capacity laws isn't just limited to the United States. You see it in other advanced economies. You also see it in developing countries as well. But to your point, a lot of what
we're seeing right now is not new. The China shock continues. We've seen it in the sectors steel and aluminum. We've seen it in solar panels. Twenty years ago, the United States, several other countries had growing economies and industries around solar panels. The Chinese double down on their what we call non market practices, their state investment in a strategic emerging sector. And what you've seen seen is something we've seen over and over again, a creation of excess capacity over production
that brings down prices. It's a kind of predatory pricing practice worldwide that has driven out producers in other economies, leaving the Chinese economy having cornered the market in production. Right now, we're still eighty five percent reliant on Chinese production and supply in solar panels. We've also seen it in batteries. We're seeing it now in evs and critical
minerals is another example. So what you see us doing with respect to steel is actually responding to a set of pressures that have been building over a couple decades. On the steel point in particular, I want to I wanted to really enforce that what you heard President Biden talk about earlier this week was to call on me as the US trade representative to consider increasing the existing tariffs on Chinese steel imports.
But we know that the challenge with.
Chinese overcapacity and excess production is a world economy challenge. The scale of the Chinese economy and its ability to manufacture and produce will depress prices worldwide. It infects the global economy and global prices. And so what you've seen is as well the maintenance of the global steel tariffs and aluminum terriffs. But you also see us, as the Biden administration, evolving out of that particular framework. You see us in particular taking leadership role with the European Union.
Over the last two years, we have been engaged in intensive negotiations for a new framework Global Sustainable Steel and Aluminum Agreement that we are working on to address not just the excess capacity pressures, but also to try to create incentives for cleaner production and cleaner trade in steel and aluminum.
So, Ambassador, if I can jump in, if we can focus just on steel, because we've got so much to unpack there. Let's take steel, and we both know how complex this is, and I can share some numbers with our audience, certainly not for your benefit. Direct Chinese imports, as you know, the estimate is something like zero point six percent of total steel demand in the United States. The problem is a lot of this is going through Mexico. So, Ambassador, a question I heard someone ask recently is how do
we make them eat it? So how can you address what is happening in Mexico? How do we stop the steel coming through the back door?
So I'm going to impact this back at you in a couple of ways. One is to reinforce the point that when you have a producer, a major, major, dominant producer like China producing at below market rates, it affects the entire supply chain, starting upstream all the way downstream. The Mexico challenge is a piece of this, and again the challenge is worldwide. So I think with respect to Mexico, there are a couple pieces. One is to the extent that upstream steel is coming into Mexico and being worked
on and then coming into the United States. You've got to figure out how to level the playing field there. Secondly, there's a much more blunt challenge with respect to steel coming into Mexico and improperly coming into the United States as Mexican steel. So there is a challenge with respect to the evasion of trade programs and trade frameworks where steel that's not properly Mexican is coming in as Mexican steel and enjoying the preferences that we provide to the
Mexican economy and Mexican producers. So again, with respect to steel production, in order for the United States to continue to be able to pre use, to continue to grow our steel industry, to continue to grow cleaner steel industries, what you see is a number of programs that we are putting in place to ensure the integrity of trade systems. The challenge right now is and steal is an excellent, excellent example that there is no such thing as free
trade in steel. The market in steel globally is significantly distorted by what we are calling the non market policies
and practices coming out of China. Supply that's being created production plans that are not linked to demand, and so what happens is you have a significant depression of prices, and it requires economies like the United States to work with other economies that want to be opened, that want to openly trade, to take more significant defensive measures against the unfair practice that have infected this sector.
Ambassador Tide, do you see the similar dynamics and what you're describing in steel happening right now with the ev market one.
It's the same pattern that we see repeated over and over in different sectors. And the challenge for us is is this has not been our practice largely. We have really adhered to this notion that if you just keep taking down barriers, if you just keep trying to trade more, if you just keep chasing efficiency, that everything will work
out great. The challenge is that in every one of these sectors we see that Chinese practices allow for Beijing to capture larger and larger shares of the global market, so that you end up with a dominant producer in this entire economy. And what happens is the rest of us become extremely vulnerable and reliant on that supply.
What we are trying to do is to.
Find opportunities for us to descend, to stand up so that we can restore more freedom to trade, more freedom to economy, more freedom for other economies to stand up to the coercion that results when you have these types of vulnerabilities that can be used to create political pressures on economies.
Well, the Biden administration made very clear that tariffs on Chinese evs, bigger tariffs are coming down the pipeline. But Secretary Yellen also said the US quote won't take anything off the table when it comes to this over capacity coming out of China. We though have not seen one single wto complaint from the United States. Is that potentially a tool that you can use?
I wonder if you get your TV say your talking points from my Republican senator counterparts from my hearing earlier this week. Look, the World Trade Organization is incredibly is an incredibly important valuable institution in the world. As part of the post World War two Brenton Wood Framework, the World Trade Organization is critical to the functioning of a modern world economy. That said, we also are very clear in our commitment to the WTO lies our commitment to
reforming the WTO. I know this conversation is actually not unique to the WTO. All the Bretton Woods institutions, the IMF, the World Bank, this is their week. In all of the conversations today, what you hear in all of those conversations is the question of how do these institutions evolve to meet the challenges that we're facing today With respect to the WTO. That is also true, and in terms of WTO dispute settlement, we as the United States, are very very proud of our record with respect to.
Challenging Chinese practices at the WTO.
What we have found over time, however, is that each one of those cases that we bring, each victory that we score, ends up being a quite limited victory. It ends up in quite limited change. What we are dealing with in terms of the challenge of the Chinese economic
system is structural. It's systemic, and so that's why We are bringing more strategy, We are bringing more creativity to look for more effective ways to level the playing field, working with other like minded economies, and also working to raise.
These concerns inside of the.
Wto ambassad it's funny you bring up Republicans and their talking points because broad strokes wise, what we see is that whether or not we get another Biden administration or Trump back into the White House, trade policies look almost the same when it comes to China. Do you see a divergence in what we potentially could see from Trump or Biden given the fact that we still have Trump ra tariffs right now under this administration.
So I think what I will say is this that whether it's Republicans or Democrats, going back to the earlier comments around the China shock, we are together. And I think that this also applies outside of the United.
States as well.
We are coming to a realization and raising in our consciousness a common assessment with respect to diagnosing what the problem is, what the source of today's world economic and trade challenges is, then you have to move on to what are you going to do about it? And with respect to the Biden administration, we are very proud of our record. First of all, the tariffs are an important tool in the trade toolbox, and that it is important to use them effectively and strategically and to know what
the leverage is with respect to the tariffs. So yes, we continue to retain tariffs for strategic purposes. Second, the Biden Administration hasn't rested on just trade or just tariffs to address the challenges that we face with respect to competing fairly with We have also, as you've seen, activated significant investments into the United States economy for the US
workers and for American infrastructure. It's the bipart is an infrastructure law, chips and science, the Inflation Reduction Act, the investments into the clean energy revolution. In addition to that, you also see that we have initiated an investigation into China's unfair non market practices that have been alleged by five of our labor unions with respect to their maritime,
logistics and shipbuilding sectors. When you take these three segments together, what you have is the articulation of the Biden Administration's China trade response.
And by st I just want to ask your question very quickly about Chinese evs. If you had a decision on that. Can we expect the conclusion anytime soon?
So I'm not quite sure.
There's not a specific question before us. I think with respect to maritime logistics and shipbuilding, for instance, there is a petition that was presented to us. Think to your point, it's what are we going to do about this trend
that we see repeating itself in the EV sector. Again, we have an entire set of tools before us, many of them are with the US Trade Representative, whether it's with respect to investigations that we can begin, whether it's looking at the set of tariffs that are entrined in our tariff review which has been ongoing for the last eighteen months.
With respect to that tariff.
Review, I am confident that as a whole of government exercise that we have been in an undertaking with deliberation, seriousness, especially with respect to looking at more strategic, more effective deployment of the tariffs that we have to address the inequities in our trade relations with China. I am confident that that conclusion will be coming soon.
And Bessida, I can't just conclude with the following question, and it's probably difficult to answer directly, but the issues that you and I have discussed that we've discussed over the last ten minutes or so as we started this conversation. They're not new. They've been at the forefront of many
economist minds for a long long time. What strikes me is somewhat amusing is that it took someone like Donald Trump in twenty sixteen to put at the forefront of American politics to shake the establishment to almost make this consensus. And when I was listening to Secretary Yellen over the last few weeks, I just thought, this feels like a Secretary Yellen discovery tour, something personal to her and nothing
really new for policy. And Bassador, can I ask you what took so long for the establishment in America to figure out this was the road they needed to go down.
Well, it's an excellent question, because you know what I would do is I would actually have leaders in trade policy take ownership of the call the earliest calls for the need for attention to the challenges that we are all focused on now. These are issues that we have been raising at the WTO bilaterally with China, very directly for a very long time. We had direct dialogues with China where we would raise these issues over and over,
we would raise them with our partners. I think part of what you see is the increasing pressure that is being placed on economic dynamics. One last point I wanted to make with respect to inflation. Inflation conversation gets attached to tariffs a lot. The more we are talking about inflation and examining our worldwide experience with this phenomenon over the last couple of years, the more we are realizing that inflationary pressures are linked to the supply challenges that
we have. Those supply challenges go to our vulnerabilities over concentration, the domination that we see by certain producers.
In the world economy.
I think that is the that is the next area where we need to drive coalescence around our analysis so that we can work together, whether it's Democrats and Republicans, whether it's the United States and other countries on solutions.
Ambassador looking forward to having this conversation in person next time and join New York. Thank you so much for your time over the last ten minutes or so. The US Trade Representative, Ambassador Catherine Tide there on a whole range of trade issues,