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US mulls investigation into China’s industrial subsidies

Move could mean more tariffs on Chinese products

U.S. Trade Representative Katherine Tai. (US-China Business Council photo)

U.S. Trade Representative Katherine Tai. (US-China Business Council photo)

TAIPEI (Taiwan News) — The Biden administration is reportedly looking to investigate Beijing’s rampant use of industrial subsidies in a move that could place even more tariffs on Chinese goods with the aim of increasing pressure in the trade war.

The potential new tariffs would be under section 301 of the 1974 Trade Act, which is the same mechanism the Trump administration used to place US$360 billion (about NT$10 trillion) worth of Chinese goods under tariffs, according to the Financial Times (FT). The effort is said to be spearheaded by U.S. Trade Representative Katherine Tai and U.S. Secretary of Commerce Gina Raimondo.

The Biden administration has been under consistent pressure from U.S. business groups to ease Trump-era restrictions and reduce costs for American importers, but the rumored new sanctions would represent a rejection of that pressure, according to the report.

Biden and his team are looking to initiate a “full-court press” against Beijing, said a source close to the matter cited by the Wall Street Journal (WSJ).

The administration is also reportedly looking to make common cause with Japan, the European Union, and other parties to make the case against the subsidies in the World Trade Organization.

Under the Phase One agreement negotiated by the Trump administration, Beijing pledged to increase its purchases of U.S. goods by US$200 billion across 2020 and 2021, though it fell short by 40% last year and is set to fall behind again by 30% this year, per the WSJ.

Beijing’s heavy-handed use of industrial subsidies, long a source of frustration among competitor nations, was supposed to be addressed by the Trump administration in the Phase Two negotiations that never got off the ground.

With the probe into industrial subsidies and the potential sanctions that could follow, the Biden administration is trying to pressure the Chinese back to the negotiating table, though it is unlikely the White House really believes Beijing will give up the subsidies, according to the report.