WEBVTT - Ambassador Katherine Tai Talks Steel Tariffs 0:00:02.440 --> 0:00:07.160 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.200 --> 0:00:09.879 It's the latest. This morning, President Biden calling for higher 0:00:09.920 --> 0:00:12.440 tariffs on Chinese steel in a bid to shore up 0:00:12.480 --> 0:00:15.800 the US steel sector. China slamming the potential restriction, saying 0:00:15.840 --> 0:00:19.439 the US is quote arbitrarily slapping tariffs on Chinese products. 0:00:19.640 --> 0:00:23.080 Ambassador Catherine Tie, US trade representative, joined us now from 0:00:23.120 --> 0:00:25.439 New York. Ambassador, wonderful to have you with us on 0:00:25.480 --> 0:00:27.920 the program. We've some called us done a role reversal. 0:00:27.960 --> 0:00:29.640 You're in New York and we're down in Washington. Will 0:00:29.680 --> 0:00:32.199 make this work properly next time, Ambassador. This is a 0:00:32.240 --> 0:00:34.840 topic we've been talking about for a long long time, 0:00:35.159 --> 0:00:38.200 Chinese over capacity. We all know about the China shark. 0:00:38.280 --> 0:00:41.800 We all studied it an obliterated manufacturing basis in places 0:00:41.880 --> 0:00:44.159 like the United States of America. Can I just give 0:00:44.159 --> 0:00:45.640 you a few minutes just to sort of lay the 0:00:45.680 --> 0:00:49.040 ground for us. What's changed and what's new about what's 0:00:49.040 --> 0:00:50.000 developing right now? 0:00:50.520 --> 0:00:52.239 Well, i'd be delighted to you. It's wonderful to be 0:00:52.280 --> 0:00:54.200 here with all of you. You're absolutely right about the 0:00:54.280 --> 0:00:59.520 China shok and it's become an established set of facts 0:00:59.520 --> 0:01:02.640 as we look back on the last several decades of 0:01:03.000 --> 0:01:08.400 China's emergence as an economic powerhouse in the world. As 0:01:08.400 --> 0:01:10.679 you've seen the growth of the Chinese economy, what you've 0:01:10.720 --> 0:01:14.720 also seen is the negative impacts on other economies like 0:01:15.080 --> 0:01:19.480 that of the United States, and of course the industrial 0:01:19.520 --> 0:01:23.280 erosion that you've seen here the manufacturing capacity laws isn't 0:01:23.319 --> 0:01:25.760 just limited to the United States. You see it in 0:01:25.800 --> 0:01:29.759 other advanced economies. You also see it in developing countries 0:01:29.800 --> 0:01:32.560 as well. But to your point, a lot of what 0:01:32.600 --> 0:01:36.520 we're seeing right now is not new. The China shock continues. 0:01:36.800 --> 0:01:39.680 We've seen it in the sectors steel and aluminum. We've 0:01:39.720 --> 0:01:43.120 seen it in solar panels. Twenty years ago, the United States, 0:01:43.240 --> 0:01:49.120 several other countries had growing economies and industries around solar panels. 0:01:50.280 --> 0:01:54.160 The Chinese double down on their what we call non 0:01:54.240 --> 0:01:59.160 market practices, their state investment in a strategic emerging sector. 0:01:59.480 --> 0:02:01.560 And what you've seen seen is something we've seen over 0:02:01.560 --> 0:02:07.720 and over again, a creation of excess capacity over production 0:02:08.160 --> 0:02:11.480 that brings down prices. It's a kind of predatory pricing 0:02:11.560 --> 0:02:16.760 practice worldwide that has driven out producers in other economies, 0:02:16.880 --> 0:02:20.280 leaving the Chinese economy having cornered the market in production. 0:02:21.040 --> 0:02:25.920 Right now, we're still eighty five percent reliant on Chinese 0:02:25.960 --> 0:02:29.200 production and supply in solar panels. We've also seen it 0:02:29.280 --> 0:02:33.960 in batteries. We're seeing it now in evs and critical 0:02:34.000 --> 0:02:37.520 minerals is another example. So what you see us doing 0:02:37.600 --> 0:02:44.760 with respect to steel is actually responding to a set 0:02:44.760 --> 0:02:49.560 of pressures that have been building over a couple decades. 0:02:50.320 --> 0:02:52.560 On the steel point in particular, I want to I 0:02:52.600 --> 0:02:56.880 wanted to really enforce that what you heard President Biden 0:02:57.320 --> 0:03:01.079 talk about earlier this week was to call on me 0:03:01.160 --> 0:03:06.480 as the US trade representative to consider increasing the existing 0:03:06.560 --> 0:03:09.200 tariffs on Chinese steel imports. 0:03:09.480 --> 0:03:11.440 But we know that the challenge with. 0:03:11.600 --> 0:03:17.280 Chinese overcapacity and excess production is a world economy challenge. 0:03:17.880 --> 0:03:21.800 The scale of the Chinese economy and its ability to 0:03:22.040 --> 0:03:28.480 manufacture and produce will depress prices worldwide. It infects the 0:03:28.520 --> 0:03:32.560 global economy and global prices. And so what you've seen 0:03:32.800 --> 0:03:37.320 is as well the maintenance of the global steel tariffs 0:03:37.520 --> 0:03:39.640 and aluminum terriffs. But you also see us, as the 0:03:39.680 --> 0:03:44.880 Biden administration, evolving out of that particular framework. You see 0:03:44.960 --> 0:03:48.120 us in particular taking leadership role with the European Union. 0:03:48.560 --> 0:03:50.920 Over the last two years, we have been engaged in 0:03:50.920 --> 0:03:56.720 intensive negotiations for a new framework Global Sustainable Steel and 0:03:56.800 --> 0:04:02.680 Aluminum Agreement that we are working on to address not 0:04:02.880 --> 0:04:05.840 just the excess capacity pressures, but also to try to 0:04:05.880 --> 0:04:10.000 create incentives for cleaner production and cleaner trade in steel 0:04:10.040 --> 0:04:11.000 and aluminum. 0:04:11.680 --> 0:04:13.240 So, Ambassador, if I can jump in, if we can 0:04:13.280 --> 0:04:15.480 focus just on steel, because we've got so much to 0:04:15.520 --> 0:04:18.040 unpack there. Let's take steel, and we both know how 0:04:18.080 --> 0:04:20.000 complex this is, and I can share some numbers with 0:04:20.040 --> 0:04:23.240 our audience, certainly not for your benefit. Direct Chinese imports, 0:04:23.240 --> 0:04:25.200 as you know, the estimate is something like zero point 0:04:25.279 --> 0:04:28.200 six percent of total steel demand in the United States. 0:04:28.400 --> 0:04:33.080 The problem is a lot of this is going through Mexico. So, Ambassador, 0:04:33.080 --> 0:04:35.680 a question I heard someone ask recently is how do 0:04:35.800 --> 0:04:39.240 we make them eat it? So how can you address 0:04:39.279 --> 0:04:41.839 what is happening in Mexico? How do we stop the 0:04:41.880 --> 0:04:43.520 steel coming through the back door? 0:04:44.320 --> 0:04:46.919 So I'm going to impact this back at you in 0:04:46.960 --> 0:04:49.679 a couple of ways. One is to reinforce the point 0:04:49.760 --> 0:04:53.680 that when you have a producer, a major, major, dominant 0:04:53.880 --> 0:05:00.120 producer like China producing at below market rates, it affects 0:05:00.120 --> 0:05:04.280 the entire supply chain, starting upstream all the way downstream. 0:05:04.600 --> 0:05:08.960 The Mexico challenge is a piece of this, and again 0:05:09.200 --> 0:05:13.040 the challenge is worldwide. So I think with respect to Mexico, 0:05:13.120 --> 0:05:16.000 there are a couple pieces. One is to the extent 0:05:16.040 --> 0:05:20.919 that upstream steel is coming into Mexico and being worked 0:05:20.960 --> 0:05:23.280 on and then coming into the United States. You've got 0:05:23.320 --> 0:05:26.400 to figure out how to level the playing field there. Secondly, 0:05:26.520 --> 0:05:31.440 there's a much more blunt challenge with respect to steel 0:05:31.480 --> 0:05:36.040 coming into Mexico and improperly coming into the United States 0:05:36.360 --> 0:05:39.600 as Mexican steel. So there is a challenge with respect 0:05:39.600 --> 0:05:44.320 to the evasion of trade programs and trade frameworks where 0:05:44.560 --> 0:05:48.640 steel that's not properly Mexican is coming in as Mexican 0:05:48.720 --> 0:05:51.400 steel and enjoying the preferences that we provide to the 0:05:51.400 --> 0:05:55.080 Mexican economy and Mexican producers. So again, with respect to 0:05:55.680 --> 0:05:59.120 steel production, in order for the United States to continue 0:05:59.120 --> 0:06:01.760 to be able to pre use, to continue to grow 0:06:01.800 --> 0:06:06.960 our steel industry, to continue to grow cleaner steel industries, 0:06:07.440 --> 0:06:10.400 what you see is a number of programs that we 0:06:10.440 --> 0:06:15.040 are putting in place to ensure the integrity of trade systems. 0:06:15.240 --> 0:06:17.760 The challenge right now is and steal is an excellent, 0:06:17.960 --> 0:06:23.920 excellent example that there is no such thing as free 0:06:23.960 --> 0:06:30.719 trade in steel. The market in steel globally is significantly 0:06:30.760 --> 0:06:33.920 distorted by what we are calling the non market policies 0:06:33.960 --> 0:06:38.960 and practices coming out of China. Supply that's being created 0:06:39.360 --> 0:06:43.080 production plans that are not linked to demand, and so 0:06:43.160 --> 0:06:46.719 what happens is you have a significant depression of prices, 0:06:46.880 --> 0:06:49.680 and it requires economies like the United States to work 0:06:49.920 --> 0:06:53.120 with other economies that want to be opened, that want 0:06:53.160 --> 0:06:58.159 to openly trade, to take more significant defensive measures against 0:06:58.440 --> 0:07:01.880 the unfair practice that have infected this sector. 0:07:03.120 --> 0:07:05.920 Ambassador Tide, do you see the similar dynamics and what 0:07:05.920 --> 0:07:08.560 you're describing in steel happening right now with the ev 0:07:08.760 --> 0:07:10.680 market one. 0:07:10.880 --> 0:07:14.000 It's the same pattern that we see repeated over and 0:07:14.080 --> 0:07:17.880 over in different sectors. And the challenge for us is 0:07:17.720 --> 0:07:21.360 is this has not been our practice largely. We have 0:07:22.320 --> 0:07:25.440 really adhered to this notion that if you just keep 0:07:25.480 --> 0:07:28.880 taking down barriers, if you just keep trying to trade more, 0:07:29.120 --> 0:07:32.760 if you just keep chasing efficiency, that everything will work 0:07:32.800 --> 0:07:36.280 out great. The challenge is that in every one of 0:07:36.320 --> 0:07:41.560 these sectors we see that Chinese practices allow for Beijing 0:07:41.760 --> 0:07:45.240 to capture larger and larger shares of the global market, 0:07:45.720 --> 0:07:49.080 so that you end up with a dominant producer in 0:07:49.240 --> 0:07:52.600 this entire economy. And what happens is the rest of 0:07:52.640 --> 0:07:55.400 us become extremely vulnerable and reliant on that supply. 0:07:55.840 --> 0:07:57.640 What we are trying to do is to. 0:07:59.160 --> 0:08:04.200 Find opportunities for us to descend, to stand up so 0:08:04.280 --> 0:08:08.000 that we can restore more freedom to trade, more freedom 0:08:08.000 --> 0:08:11.160 to economy, more freedom for other economies to stand up 0:08:11.200 --> 0:08:15.000 to the coercion that results when you have these types 0:08:15.000 --> 0:08:18.640 of vulnerabilities that can be used to create political pressures 0:08:18.680 --> 0:08:19.440 on economies. 0:08:20.600 --> 0:08:23.720 Well, the Biden administration made very clear that tariffs on 0:08:23.840 --> 0:08:27.200 Chinese evs, bigger tariffs are coming down the pipeline. But 0:08:27.240 --> 0:08:30.520 Secretary Yellen also said the US quote won't take anything 0:08:30.560 --> 0:08:33.280 off the table when it comes to this over capacity 0:08:33.280 --> 0:08:35.839 coming out of China. We though have not seen one 0:08:35.880 --> 0:08:39.440 single wto complaint from the United States. Is that potentially 0:08:39.480 --> 0:08:40.640 a tool that you can use? 0:08:41.160 --> 0:08:43.400 I wonder if you get your TV say your talking 0:08:43.400 --> 0:08:47.680 points from my Republican senator counterparts from my hearing earlier 0:08:47.760 --> 0:08:51.319 this week. Look, the World Trade Organization is incredibly is 0:08:51.400 --> 0:08:57.400 an incredibly important valuable institution in the world. As part 0:08:57.440 --> 0:09:01.640 of the post World War two Brenton Wood Framework, the 0:09:01.679 --> 0:09:05.679 World Trade Organization is critical to the functioning of a 0:09:05.720 --> 0:09:09.640 modern world economy. That said, we also are very clear 0:09:09.679 --> 0:09:12.640 in our commitment to the WTO lies our commitment to 0:09:12.720 --> 0:09:16.440 reforming the WTO. I know this conversation is actually not 0:09:16.520 --> 0:09:21.240 unique to the WTO. All the Bretton Woods institutions, the IMF, 0:09:21.440 --> 0:09:24.800 the World Bank, this is their week. In all of 0:09:24.840 --> 0:09:29.520 the conversations today, what you hear in all of those 0:09:29.520 --> 0:09:33.400 conversations is the question of how do these institutions evolve 0:09:33.800 --> 0:09:36.600 to meet the challenges that we're facing today With respect 0:09:36.640 --> 0:09:39.559 to the WTO. That is also true, and in terms 0:09:39.559 --> 0:09:43.319 of WTO dispute settlement, we as the United States, are 0:09:43.480 --> 0:09:45.800 very very proud of our record with respect to. 0:09:45.840 --> 0:09:47.880 Challenging Chinese practices at the WTO. 0:09:48.120 --> 0:09:50.520 What we have found over time, however, is that each 0:09:50.640 --> 0:09:53.000 one of those cases that we bring, each victory that 0:09:53.040 --> 0:09:57.080 we score, ends up being a quite limited victory. It 0:09:57.200 --> 0:10:00.160 ends up in quite limited change. What we are dealing 0:10:00.200 --> 0:10:02.640 with in terms of the challenge of the Chinese economic 0:10:02.720 --> 0:10:07.320 system is structural. It's systemic, and so that's why We 0:10:07.559 --> 0:10:13.400 are bringing more strategy, We are bringing more creativity to 0:10:13.480 --> 0:10:17.320 look for more effective ways to level the playing field, 0:10:17.559 --> 0:10:22.720 working with other like minded economies, and also working to raise. 0:10:22.520 --> 0:10:23.920 These concerns inside of the. 0:10:23.920 --> 0:10:27.880 Wto ambassad it's funny you bring up Republicans and their 0:10:27.960 --> 0:10:31.360 talking points because broad strokes wise, what we see is 0:10:31.400 --> 0:10:34.400 that whether or not we get another Biden administration or 0:10:34.440 --> 0:10:37.960 Trump back into the White House, trade policies look almost 0:10:38.080 --> 0:10:40.760 the same when it comes to China. Do you see 0:10:40.800 --> 0:10:43.320 a divergence in what we potentially could see from Trump 0:10:43.440 --> 0:10:46.240 or Biden given the fact that we still have Trump 0:10:46.320 --> 0:10:48.880 ra tariffs right now under this administration. 0:10:49.720 --> 0:10:53.200 So I think what I will say is this that 0:10:53.840 --> 0:10:58.200 whether it's Republicans or Democrats, going back to the earlier 0:10:58.200 --> 0:11:03.120 comments around the China shock, we are together. And I 0:11:03.120 --> 0:11:05.800 think that this also applies outside of the United. 0:11:05.559 --> 0:11:06.319 States as well. 0:11:06.720 --> 0:11:10.440 We are coming to a realization and raising in our 0:11:10.480 --> 0:11:15.320 consciousness a common assessment with respect to diagnosing what the 0:11:15.520 --> 0:11:19.920 problem is, what the source of today's world economic and 0:11:19.960 --> 0:11:24.400 trade challenges is, then you have to move on to 0:11:24.440 --> 0:11:26.320 what are you going to do about it? And with 0:11:26.400 --> 0:11:29.240 respect to the Biden administration, we are very proud of 0:11:29.280 --> 0:11:32.440 our record. First of all, the tariffs are an important 0:11:32.480 --> 0:11:36.320 tool in the trade toolbox, and that it is important 0:11:36.320 --> 0:11:39.839 to use them effectively and strategically and to know what 0:11:39.880 --> 0:11:42.559 the leverage is with respect to the tariffs. So yes, 0:11:42.920 --> 0:11:49.360 we continue to retain tariffs for strategic purposes. Second, the 0:11:49.400 --> 0:11:53.319 Biden Administration hasn't rested on just trade or just tariffs 0:11:53.600 --> 0:11:58.160 to address the challenges that we face with respect to 0:11:58.679 --> 0:12:04.079 competing fairly with We have also, as you've seen, activated 0:12:04.320 --> 0:12:09.200 significant investments into the United States economy for the US 0:12:09.360 --> 0:12:14.080 workers and for American infrastructure. It's the bipart is an 0:12:14.080 --> 0:12:18.000 infrastructure law, chips and science, the Inflation Reduction Act, the 0:12:18.040 --> 0:12:21.760 investments into the clean energy revolution. In addition to that, 0:12:21.840 --> 0:12:26.600 you also see that we have initiated an investigation into 0:12:27.080 --> 0:12:31.240 China's unfair non market practices that have been alleged by 0:12:31.440 --> 0:12:34.640 five of our labor unions with respect to their maritime, 0:12:35.440 --> 0:12:42.640 logistics and shipbuilding sectors. When you take these three segments together, 0:12:43.040 --> 0:12:47.480 what you have is the articulation of the Biden Administration's 0:12:47.920 --> 0:12:49.360 China trade response. 0:12:51.960 --> 0:12:53.440 And by st I just want to ask your question 0:12:53.520 --> 0:12:55.800 very quickly about Chinese evs. If you had a decision 0:12:55.800 --> 0:12:58.040 on that. Can we expect the conclusion anytime soon? 0:12:58.679 --> 0:12:59.720 So I'm not quite sure. 0:12:59.760 --> 0:13:03.760 There's not a specific question before us. I think with 0:13:03.800 --> 0:13:08.040 respect to maritime logistics and shipbuilding, for instance, there is 0:13:08.080 --> 0:13:11.079 a petition that was presented to us. Think to your point, 0:13:11.320 --> 0:13:15.000 it's what are we going to do about this trend 0:13:15.040 --> 0:13:18.040 that we see repeating itself in the EV sector. Again, 0:13:18.280 --> 0:13:21.640 we have an entire set of tools before us, many 0:13:21.679 --> 0:13:24.920 of them are with the US Trade Representative, whether it's 0:13:25.520 --> 0:13:28.760 with respect to investigations that we can begin, whether it's 0:13:29.280 --> 0:13:32.599 looking at the set of tariffs that are entrined in 0:13:32.679 --> 0:13:37.840 our tariff review which has been ongoing for the last 0:13:37.880 --> 0:13:38.680 eighteen months. 0:13:39.360 --> 0:13:41.599 With respect to that tariff. 0:13:41.240 --> 0:13:45.320 Review, I am confident that as a whole of government 0:13:46.040 --> 0:13:51.200 exercise that we have been in an undertaking with deliberation, seriousness, 0:13:51.320 --> 0:13:55.240 especially with respect to looking at more strategic, more effective 0:13:55.280 --> 0:13:58.520 deployment of the tariffs that we have to address the 0:13:58.600 --> 0:14:01.800 inequities in our trade relations with China. I am confident 0:14:01.880 --> 0:14:04.160 that that conclusion will be coming soon. 0:14:05.280 --> 0:14:07.280 And Bessida, I can't just conclude with the following question, 0:14:07.400 --> 0:14:10.360 and it's probably difficult to answer directly, but the issues 0:14:10.360 --> 0:14:12.600 that you and I have discussed that we've discussed over 0:14:12.640 --> 0:14:15.079 the last ten minutes or so as we started this conversation. 0:14:15.520 --> 0:14:17.800 They're not new. They've been at the forefront of many 0:14:17.840 --> 0:14:20.840 economist minds for a long long time. What strikes me 0:14:20.960 --> 0:14:23.920 is somewhat amusing is that it took someone like Donald 0:14:23.960 --> 0:14:27.040 Trump in twenty sixteen to put at the forefront of 0:14:27.120 --> 0:14:31.320 American politics to shake the establishment to almost make this consensus. 0:14:31.520 --> 0:14:33.640 And when I was listening to Secretary Yellen over the 0:14:33.680 --> 0:14:36.040 last few weeks, I just thought, this feels like a 0:14:36.080 --> 0:14:39.920 Secretary Yellen discovery tour, something personal to her and nothing 0:14:39.960 --> 0:14:42.240 really new for policy. And Bassador, can I ask you 0:14:42.600 --> 0:14:45.720 what took so long for the establishment in America to 0:14:45.760 --> 0:14:48.440 figure out this was the road they needed to go down. 0:14:49.320 --> 0:14:52.320 Well, it's an excellent question, because you know what I 0:14:52.360 --> 0:14:56.000 would do is I would actually have leaders in trade 0:14:56.000 --> 0:15:01.960 policy take ownership of the call the earliest calls for 0:15:02.320 --> 0:15:05.240 the need for attention to the challenges that we are 0:15:05.280 --> 0:15:09.440 all focused on now. These are issues that we have 0:15:09.520 --> 0:15:13.360 been raising at the WTO bilaterally with China, very directly 0:15:13.400 --> 0:15:16.640 for a very long time. We had direct dialogues with 0:15:16.760 --> 0:15:18.840 China where we would raise these issues over and over, 0:15:18.880 --> 0:15:21.400 we would raise them with our partners. I think part 0:15:21.440 --> 0:15:24.360 of what you see is the increasing pressure that is 0:15:24.400 --> 0:15:29.920 being placed on economic dynamics. One last point I wanted 0:15:29.920 --> 0:15:33.840 to make with respect to inflation. Inflation conversation gets attached 0:15:33.880 --> 0:15:37.520 to tariffs a lot. The more we are talking about 0:15:37.560 --> 0:15:42.640 inflation and examining our worldwide experience with this phenomenon over 0:15:42.640 --> 0:15:44.920 the last couple of years, the more we are realizing 0:15:45.000 --> 0:15:48.800 that inflationary pressures are linked to the supply challenges that 0:15:48.840 --> 0:15:53.880 we have. Those supply challenges go to our vulnerabilities over concentration, 0:15:54.320 --> 0:15:58.800 the domination that we see by certain producers. 0:15:58.080 --> 0:15:59.120 In the world economy. 0:15:59.240 --> 0:16:01.400 I think that is the that is the next area 0:16:01.440 --> 0:16:04.920 where we need to drive coalescence around our analysis so 0:16:05.000 --> 0:16:08.320 that we can work together, whether it's Democrats and Republicans, 0:16:08.480 --> 0:16:12.120 whether it's the United States and other countries on solutions. 0:16:13.240 --> 0:16:15.800 Ambassador looking forward to having this conversation in person next 0:16:15.800 --> 0:16:17.640 time and join New York. Thank you so much for 0:16:17.640 --> 0:16:19.520 your time over the last ten minutes or so. The 0:16:19.640 --> 0:16:22.960 US Trade Representative, Ambassador Catherine Tide there on a whole 0:16:23.040 --> 0:16:24.360 range of trade issues,