As Biden assembles trade team, China relationship to remain "status quo."

At the beginning of March, fifty or so days into the Biden Administration as of publishing, the President’s Cabinet, Ambassadors, and other Executive Office personnel continue to move through the nomination and confirmation process. For businesses involved in international trade – specifically with China – the team setting policy and managing the relationship will include the Secretaries of Treasury, State and Commerce, the US Trade Representative, and the Ambassador to China.

Janet Yellen and Antony Blinken have filled the positions of Treasury Secretary and Secretary of State. The President’s nominee for Commerce Secretary, soon-to-be-former Rhode Island Governor Gina Raimundo, was confirmed by the Senate Tuesday 84-15.

USTR nominee Katherine Tai, speaking at her confirmation hearing last week, informed the Senate Finance Committee that her priorities included strengthening American supply chains and, with regards to China, “holding them to their trade promises.”

The Biden Administration has already laid out their priority issue of American supply chains in the Executive Order. He issued a 100-day review of critical components such as rare earth metals and semiconductors.

While Tai awaits her confirmation and the public awaits an Ambassadorial nominee, China moves to lay the groundwork for what they would like to see from Biden. From Beijing, their commerce minister told a news conference that “Cooperation was the only correct choice.”

For the administration’s part, their focus is on COVID, vaccination rollout, and getting their American Rescue Plan through the Senate after clearing the House in the early hours of Saturday morning.

Treasury Secretary Yellen has been among the first public voices to offer their near-term vision on China. Reuters reports:

 “For the moment, we have kept the tariffs in place that were put in by the Trump administration … and we’ll evaluate going forward what we think is appropriate,” Yellen told the cable news network, adding that Washington expected Beijing to adhere to its commitments on trade. Asked if tariffs worked, Yellen hesitated, then said, “We’ll look at that.”

An administration-wide review of all national security agreements, of which the trade deal with China is considered one, is underway. This is likely but one contributing factor to Yellen’s hesitancy.

The final remaining question and piece of the puzzle is who the president will nominate as Ambassador to China. There have consistently been two names floated, both of whom are believed to have an approach that would simultaneously be courteous and appropriately adversarial in the face of China’s conduct on trade, human rights, Hong Kong and their actions in the South China Sea.

Competing reporting debates who is currently leading the race, universally believed to be between former Under Secretary of State Nicholas Burns and Chicago mayor Rahm Emanuel. Prior to his term as mayor he served as President Obama’s first Chief of Staff and was a Congressional Representative.

CNN said Burns was in the lead, citing Blinken’s underscoring of the importance of career diplomats. On the same day, Bloomberg gave the edge to Emanuel, while conceding that Secretary Blinken has identified China as, “the preeminent nation-state challenge facing the US.”

Regardless of who is selected and when the final team is confirmed and in place, the signals being sent by the Biden administration are that importers should expect that 232 and 301 duties from China will remain in place for the foreseeable future and should calculate their landed costs accordingly.