Experts Grapple With China's Asks in Trade Negotiations
After China fought the U.S. to a draw, by throttling exports of rare earth magnets so that the U.S. dropped tariff levels and some export controls, former government officials, researchers and a businessman talked about what might come next.
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The Hudson Institute hosted a panel Sept. 24 called "Chokeholds and Choices: Securing Supply Chains in the U.S.-China Rivalry."
Gerard DiPippo, associate director of the RAND China Research Center, said China is hoping for three things in trade talks with the U.S.: for the U.S. to lower its tariffs on Chinese exports, for fewer export controls around chipmaking and advanced chips, and for more explicit language against Taiwanese independence.
With regard to tariffs, "You could debate how much lower" they are asking for, but DiPippo said removing the 20% fentanyl tariffs is a priority.
In response to a follow-up question from a Taiwanese reporter, DiPippo said the tariffs ask is the most urgent one.
"And it's not because the trade war is hurting so much. It's that if you got tariff relief in say a year or two, it doesn't matter as much because markets have already adjusted. So, in so far as they're going to get any gains from that, they want it to be removed quickly because tariffs tend to be sticky, and the markets are going to adjust."
Panelists also grappled with what the U.S. needs to do to secure supply chains for items such as rare earth magnets and rare earths, drones, batteries, pharmaceutical ingredients and medical supplies so that the U.S. is not so vulnerable to Chinese weaponization of U.S. dependencies on those items.
There was some pessimism that the U.S. is willing to pay more for goods, as would be required, but Rush Doshi, a former Biden administration National Security Council staffer, and the director of the Council on Foreign Relations' China Strategy Initiative, said that if the U.S. and allies team up to keep Chinese overcapacity out of their countries, they can cooperatively produce what's needed.
He said that under President Joe Biden, the U.S. tried to persuade allies to cooperate to build supply chains that cut out China.
"Sometimes that reached a limit. Coercion is another approach that can create progress," he said. He noted that until the deportation of South Korean workers setting up an EV battery factory in Georgia, Trump was making progress on compelling Korea to bring its expertise to the U.S.
South Korea was ready to spend "tons and tons of money [to invest in] U.S. shipbuilding, for example." Doshi said Korean workers are two to three times more productive at building ships than American workers are, and the hope is that these Korean operations would transfer that knowledge to the U.S.