Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: It's the latest. This morning, President Biden calling for higher
Speaker 2: tariffs on Chinese steel in a bid to shore up
Speaker 2: the US steel sector. China slamming the potential restriction, saying
Speaker 2: the US is quote arbitrarily slapping tariffs on Chinese products.
Speaker 2: Ambassador Catherine Tie, US trade representative, joined us now from
Speaker 2: New York. Ambassador, wonderful to have you with us on
Speaker 2: the program. We've some called us done a role reversal.
Speaker 2: You're in New York and we're down in Washington. Will
Speaker 2: make this work properly next time, Ambassador. This is a
Speaker 2: topic we've been talking about for a long long time,
Speaker 2: Chinese over capacity. We all know about the China shark.
Speaker 2: We all studied it an obliterated manufacturing basis in places
Speaker 2: like the United States of America. Can I just give
Speaker 2: you a few minutes just to sort of lay the
Speaker 2: ground for us. What's changed and what's new about what's
Speaker 2: developing right now?
Speaker 3: Well, i'd be delighted to you. It's wonderful to be
Speaker 3: here with all of you. You're absolutely right about the
Speaker 3: China shok and it's become an established set of facts
Speaker 3: as we look back on the last several decades of
Speaker 3: China's emergence as an economic powerhouse in the world. As
Speaker 3: you've seen the growth of the Chinese economy, what you've
Speaker 3: also seen is the negative impacts on other economies like
Speaker 3: that of the United States, and of course the industrial
Speaker 3: erosion that you've seen here the manufacturing capacity laws isn't
Speaker 3: just limited to the United States. You see it in
Speaker 3: other advanced economies. You also see it in developing countries
Speaker 3: as well. But to your point, a lot of what
Speaker 3: we're seeing right now is not new. The China shock continues.
Speaker 3: We've seen it in the sectors steel and aluminum. We've
Speaker 3: seen it in solar panels. Twenty years ago, the United States,
Speaker 3: several other countries had growing economies and industries around solar panels.
Speaker 3: The Chinese double down on their what we call non
Speaker 3: market practices, their state investment in a strategic emerging sector.
Speaker 3: And what you've seen seen is something we've seen over
Speaker 3: and over again, a creation of excess capacity over production
Speaker 3: that brings down prices. It's a kind of predatory pricing
Speaker 3: practice worldwide that has driven out producers in other economies,
Speaker 3: leaving the Chinese economy having cornered the market in production.
Speaker 3: Right now, we're still eighty five percent reliant on Chinese
Speaker 3: production and supply in solar panels. We've also seen it
Speaker 3: in batteries. We're seeing it now in evs and critical
Speaker 3: minerals is another example. So what you see us doing
Speaker 3: with respect to steel is actually responding to a set
Speaker 3: of pressures that have been building over a couple decades.
Speaker 3: On the steel point in particular, I want to I
Speaker 3: wanted to really enforce that what you heard President Biden
Speaker 3: talk about earlier this week was to call on me
Speaker 3: as the US trade representative to consider increasing the existing
Speaker 3: tariffs on Chinese steel imports.
Speaker 1: But we know that the challenge with.
Speaker 3: Chinese overcapacity and excess production is a world economy challenge.
Speaker 3: The scale of the Chinese economy and its ability to
Speaker 3: manufacture and produce will depress prices worldwide. It infects the
Speaker 3: global economy and global prices. And so what you've seen
Speaker 3: is as well the maintenance of the global steel tariffs
Speaker 3: and aluminum terriffs. But you also see us, as the
Speaker 3: Biden administration, evolving out of that particular framework. You see
Speaker 3: us in particular taking leadership role with the European Union.
Speaker 3: Over the last two years, we have been engaged in
Speaker 3: intensive negotiations for a new framework Global Sustainable Steel and
Speaker 3: Aluminum Agreement that we are working on to address not
Speaker 3: just the excess capacity pressures, but also to try to
Speaker 3: create incentives for cleaner production and cleaner trade in steel
Speaker 3: and aluminum.
Speaker 2: So, Ambassador, if I can jump in, if we can
Speaker 2: focus just on steel, because we've got so much to
Speaker 2: unpack there. Let's take steel, and we both know how
Speaker 2: complex this is, and I can share some numbers with
Speaker 2: our audience, certainly not for your benefit. Direct Chinese imports,
Speaker 2: as you know, the estimate is something like zero point
Speaker 2: six percent of total steel demand in the United States.
Speaker 2: The problem is a lot of this is going through Mexico. So, Ambassador,
Speaker 2: a question I heard someone ask recently is how do
Speaker 2: we make them eat it? So how can you address
Speaker 2: what is happening in Mexico? How do we stop the
Speaker 2: steel coming through the back door?
Speaker 3: So I'm going to impact this back at you in
Speaker 3: a couple of ways. One is to reinforce the point
Speaker 3: that when you have a producer, a major, major, dominant
Speaker 3: producer like China producing at below market rates, it affects
Speaker 3: the entire supply chain, starting upstream all the way downstream.
Speaker 3: The Mexico challenge is a piece of this, and again
Speaker 3: the challenge is worldwide. So I think with respect to Mexico,
Speaker 3: there are a couple pieces. One is to the extent
Speaker 3: that upstream steel is coming into Mexico and being worked
Speaker 3: on and then coming into the United States. You've got
Speaker 3: to figure out how to level the playing field there. Secondly,
Speaker 3: there's a much more blunt challenge with respect to steel
Speaker 3: coming into Mexico and improperly coming into the United States
Speaker 3: as Mexican steel. So there is a challenge with respect
Speaker 3: to the evasion of trade programs and trade frameworks where
Speaker 3: steel that's not properly Mexican is coming in as Mexican
Speaker 3: steel and enjoying the preferences that we provide to the
Speaker 3: Mexican economy and Mexican producers. So again, with respect to
Speaker 3: steel production, in order for the United States to continue
Speaker 3: to be able to pre use, to continue to grow
Speaker 3: our steel industry, to continue to grow cleaner steel industries,
Speaker 3: what you see is a number of programs that we
Speaker 3: are putting in place to ensure the integrity of trade systems.
Speaker 3: The challenge right now is and steal is an excellent,
Speaker 3: excellent example that there is no such thing as free
Speaker 3: trade in steel. The market in steel globally is significantly
Speaker 3: distorted by what we are calling the non market policies
Speaker 3: and practices coming out of China. Supply that's being created
Speaker 3: production plans that are not linked to demand, and so
Speaker 3: what happens is you have a significant depression of prices,
Speaker 3: and it requires economies like the United States to work
Speaker 3: with other economies that want to be opened, that want
Speaker 3: to openly trade, to take more significant defensive measures against
Speaker 3: the unfair practice that have infected this sector.
Speaker 4: Ambassador Tide, do you see the similar dynamics and what
Speaker 4: you're describing in steel happening right now with the ev
Speaker 4: market one.
Speaker 3: It's the same pattern that we see repeated over and
Speaker 3: over in different sectors. And the challenge for us is
Speaker 3: is this has not been our practice largely. We have
Speaker 3: really adhered to this notion that if you just keep
Speaker 3: taking down barriers, if you just keep trying to trade more,
Speaker 3: if you just keep chasing efficiency, that everything will work
Speaker 3: out great. The challenge is that in every one of
Speaker 3: these sectors we see that Chinese practices allow for Beijing
Speaker 3: to capture larger and larger shares of the global market,
Speaker 3: so that you end up with a dominant producer in
Speaker 3: this entire economy. And what happens is the rest of
Speaker 3: us become extremely vulnerable and reliant on that supply.
Speaker 1: What we are trying to do is to.
Speaker 3: Find opportunities for us to descend, to stand up so
Speaker 3: that we can restore more freedom to trade, more freedom
Speaker 3: to economy, more freedom for other economies to stand up
Speaker 3: to the coercion that results when you have these types
Speaker 3: of vulnerabilities that can be used to create political pressures
Speaker 3: on economies.
Speaker 4: Well, the Biden administration made very clear that tariffs on
Speaker 4: Chinese evs, bigger tariffs are coming down the pipeline. But
Speaker 4: Secretary Yellen also said the US quote won't take anything
Speaker 4: off the table when it comes to this over capacity
Speaker 4: coming out of China. We though have not seen one
Speaker 4: single wto complaint from the United States. Is that potentially
Speaker 4: a tool that you can use?
Speaker 3: I wonder if you get your TV say your talking
Speaker 3: points from my Republican senator counterparts from my hearing earlier
Speaker 3: this week. Look, the World Trade Organization is incredibly is
Speaker 3: an incredibly important valuable institution in the world. As part
Speaker 3: of the post World War two Brenton Wood Framework, the
Speaker 3: World Trade Organization is critical to the functioning of a
Speaker 3: modern world economy. That said, we also are very clear
Speaker 3: in our commitment to the WTO lies our commitment to
Speaker 3: reforming the WTO. I know this conversation is actually not
Speaker 3: unique to the WTO. All the Bretton Woods institutions, the IMF,
Speaker 3: the World Bank, this is their week. In all of
Speaker 3: the conversations today, what you hear in all of those
Speaker 3: conversations is the question of how do these institutions evolve
Speaker 3: to meet the challenges that we're facing today With respect
Speaker 3: to the WTO. That is also true, and in terms
Speaker 3: of WTO dispute settlement, we as the United States, are
Speaker 3: very very proud of our record with respect to.
Speaker 1: Challenging Chinese practices at the WTO.
Speaker 3: What we have found over time, however, is that each
Speaker 3: one of those cases that we bring, each victory that
Speaker 3: we score, ends up being a quite limited victory. It
Speaker 3: ends up in quite limited change. What we are dealing
Speaker 3: with in terms of the challenge of the Chinese economic
Speaker 3: system is structural. It's systemic, and so that's why We
Speaker 3: are bringing more strategy, We are bringing more creativity to
Speaker 3: look for more effective ways to level the playing field,
Speaker 3: working with other like minded economies, and also working to raise.
Speaker 1: These concerns inside of the.
Speaker 4: Wto ambassad it's funny you bring up Republicans and their
Speaker 4: talking points because broad strokes wise, what we see is
Speaker 4: that whether or not we get another Biden administration or
Speaker 4: Trump back into the White House, trade policies look almost
Speaker 4: the same when it comes to China. Do you see
Speaker 4: a divergence in what we potentially could see from Trump
Speaker 4: or Biden given the fact that we still have Trump
Speaker 4: ra tariffs right now under this administration.
Speaker 3: So I think what I will say is this that
Speaker 3: whether it's Republicans or Democrats, going back to the earlier
Speaker 3: comments around the China shock, we are together. And I
Speaker 3: think that this also applies outside of the United.
Speaker 1: States as well.
Speaker 3: We are coming to a realization and raising in our
Speaker 3: consciousness a common assessment with respect to diagnosing what the
Speaker 3: problem is, what the source of today's world economic and
Speaker 3: trade challenges is, then you have to move on to
Speaker 3: what are you going to do about it? And with
Speaker 3: respect to the Biden administration, we are very proud of
Speaker 3: our record. First of all, the tariffs are an important
Speaker 3: tool in the trade toolbox, and that it is important
Speaker 3: to use them effectively and strategically and to know what
Speaker 3: the leverage is with respect to the tariffs. So yes,
Speaker 3: we continue to retain tariffs for strategic purposes. Second, the
Speaker 3: Biden Administration hasn't rested on just trade or just tariffs
Speaker 3: to address the challenges that we face with respect to
Speaker 3: competing fairly with We have also, as you've seen, activated
Speaker 3: significant investments into the United States economy for the US
Speaker 3: workers and for American infrastructure. It's the bipart is an
Speaker 3: infrastructure law, chips and science, the Inflation Reduction Act, the
Speaker 3: investments into the clean energy revolution. In addition to that,
Speaker 3: you also see that we have initiated an investigation into
Speaker 3: China's unfair non market practices that have been alleged by
Speaker 3: five of our labor unions with respect to their maritime,
Speaker 3: logistics and shipbuilding sectors. When you take these three segments together,
Speaker 3: what you have is the articulation of the Biden Administration's
Speaker 3: China trade response.
Speaker 2: And by st I just want to ask your question
Speaker 2: very quickly about Chinese evs. If you had a decision
Speaker 2: on that. Can we expect the conclusion anytime soon?
Speaker 1: So I'm not quite sure.
Speaker 3: There's not a specific question before us. I think with
Speaker 3: respect to maritime logistics and shipbuilding, for instance, there is
Speaker 3: a petition that was presented to us. Think to your point,
Speaker 3: it's what are we going to do about this trend
Speaker 3: that we see repeating itself in the EV sector. Again,
Speaker 3: we have an entire set of tools before us, many
Speaker 3: of them are with the US Trade Representative, whether it's
Speaker 3: with respect to investigations that we can begin, whether it's
Speaker 3: looking at the set of tariffs that are entrined in
Speaker 3: our tariff review which has been ongoing for the last
Speaker 3: eighteen months.
Speaker 1: With respect to that tariff.
Speaker 3: Review, I am confident that as a whole of government
Speaker 3: exercise that we have been in an undertaking with deliberation, seriousness,
Speaker 3: especially with respect to looking at more strategic, more effective
Speaker 3: deployment of the tariffs that we have to address the
Speaker 3: inequities in our trade relations with China. I am confident
Speaker 3: that that conclusion will be coming soon.
Speaker 2: And Bessida, I can't just conclude with the following question,
Speaker 2: and it's probably difficult to answer directly, but the issues
Speaker 2: that you and I have discussed that we've discussed over
Speaker 2: the last ten minutes or so as we started this conversation.
Speaker 2: They're not new. They've been at the forefront of many
Speaker 2: economist minds for a long long time. What strikes me
Speaker 2: is somewhat amusing is that it took someone like Donald
Speaker 2: Trump in twenty sixteen to put at the forefront of
Speaker 2: American politics to shake the establishment to almost make this consensus.
Speaker 2: And when I was listening to Secretary Yellen over the
Speaker 2: last few weeks, I just thought, this feels like a
Speaker 2: Secretary Yellen discovery tour, something personal to her and nothing
Speaker 2: really new for policy. And Bassador, can I ask you
Speaker 2: what took so long for the establishment in America to
Speaker 2: figure out this was the road they needed to go down.
Speaker 3: Well, it's an excellent question, because you know what I
Speaker 3: would do is I would actually have leaders in trade
Speaker 3: policy take ownership of the call the earliest calls for
Speaker 3: the need for attention to the challenges that we are
Speaker 3: all focused on now. These are issues that we have
Speaker 3: been raising at the WTO bilaterally with China, very directly
Speaker 3: for a very long time. We had direct dialogues with
Speaker 3: China where we would raise these issues over and over,
Speaker 3: we would raise them with our partners. I think part
Speaker 3: of what you see is the increasing pressure that is
Speaker 3: being placed on economic dynamics. One last point I wanted
Speaker 3: to make with respect to inflation. Inflation conversation gets attached
Speaker 3: to tariffs a lot. The more we are talking about
Speaker 3: inflation and examining our worldwide experience with this phenomenon over
Speaker 3: the last couple of years, the more we are realizing
Speaker 3: that inflationary pressures are linked to the supply challenges that
Speaker 3: we have. Those supply challenges go to our vulnerabilities over concentration,
Speaker 3: the domination that we see by certain producers.
Speaker 1: In the world economy.
Speaker 3: I think that is the that is the next area
Speaker 3: where we need to drive coalescence around our analysis so
Speaker 3: that we can work together, whether it's Democrats and Republicans,
Speaker 3: whether it's the United States and other countries on solutions.
Speaker 2: Ambassador looking forward to having this conversation in person next
Speaker 2: time and join New York. Thank you so much for
Speaker 2: your time over the last ten minutes or so. The
Speaker 2: US Trade Representative, Ambassador Catherine Tide there on a whole
Speaker 2: range of trade issues,