USTR: Ideally, US Tariffs Reduced on Non-Sensitive Chinese Goods

Greer, who was speaking at the Economic Club of New York on Sept. 30, said, "the most challenging trade offenders have the highest tariffs," as China does now. Southeast Asia will have the next highest tariffs. He said there will be a separate tariff level for "allies where we have a lot of trade problems" -- he mentioned the U.K. and South Korea, but didn't say what tariffs would apply.

And, he said that essentially, the U.S. has 10% tariffs in the Western Hemisphere. (He didn't acknowledge 50% tariffs on some Brazilian goods, or 35% tariffs on some Canadian goods, or 25% tariffs on some Mexican goods.)

Greer didn't say what tools would be explored, though he did note that a federal appeals court just blessed the expansion of Section 301 tariffs to lists 3 and 4.

He also name-checked Section 232, which already has been used to hike tariffs on autos, steel, aluminum, pharmaceuticals, copper products, consumer goods made with steel and aluminum, some furniture and cabinets, and lumber.

"That covers a huge amount of trade in important critical sectors," he said.

He hinted at more tariff action on generic drugs. "Right now, we’re considering the best way to deploy economic tools with respect to generics," he said. "It’s a complex supply chain, it’s critically important. We have to get it right."

He said that the administration has talked extensively with drug companies, and that the administration wants to get other countries to pay more for medicines. He said the U.S. is preparing to initiate investigations on the pricing practices on pharmaceuticals in other countries, because the pharmaceutical companies said that in order to manufacture in the U.S. and charge "more reasonable prices" to U.S. consumers, other countries' customers need to pay more.

Fox Business host Maria Bartiromo asked Greer how the U.S. would like to proceed on trade with China. He acknowledged that the retaliation and counter-retaliation -- where tariffs on some Chinese exports reached 145% and China was imposing 125% tariffs on U.S. exports and weaponized export restrictions -- is an "economically dangerous situation."

"We were at, like, 145%. I like tariffs, but that's pretty high," Greer quipped.

Rolling back some of those tariffs resulted in an average 55% tariff on Chinese imports, and resumed exports of rare earth magnets, which Greer called "a good status quo," in the president's view.

Greer said he would like there to be areas where U.S. companies could import at lower tariffs, covering "certain consumer goods," but that would depend on China buying U.S. agriculture and advanced manufactured goods, such as aircraft and medical equipment.

"We're always going to trade with China, that's my view," he said.

Greer said that as a Republican and a capitalist, he understands the discomfort with managed trade, but he said it's needed, since China doesn't have a true capitalist system, and since the U.S. wants to expand its own manufacturing. He argued that high tariffs are a better way of bolstering manufacturing than the green-tech manufacturing tax credits and consumer credits the previous Congress passed.

Greer said that talks with the Chinese trade negotiators are different in the second Trump administration than they had been in the first term. (Greer was chief of staff to former USTR Robert Lighthizer.)

He said the belligerence in Chinese diplomacy that the Chinese call being "wolf warriors" has somewhat "leaked into the economic side."

He said that's unfortunate, but he said talks are still productive. "We're working through it, we're meeting with them frequently, we try to be as respectful as possible, we're trying to feel each other out," he said.

Greer said that sometimes the U.S. thinks it has leverage that turns out not to be effective, "and sometimes there are things we discover we have leverage [on] we didn't know we had, and vice versa, right?"

Greer said between the high-level meetings, there's lots of staff communication. He said, "That's really important, because I don't want to surprise them" when he hikes tariffs. "I want to have it as choreographed as much as we can."

Greer said the point of all of the administration's trade policy is to increase median income (adjusted for inflation), to reduce the trade deficit and to increase the share of GDP that comes from manufacturing. That is currently 11%, and Greer said they want it to be closer to 16% three years from now.

"I'm not trying to do a tariff for tariff’s sake," he said.

"We’re trying to optimize trade for the American worker, and it means we have to change the terms of trade for the rest of the world."

He said national security also is an issue, and that the administration does not like the fact that so much of the pharmaceutical supply chain goes through China and India. He said they'd like as much of that as possible in the U.S., and, if not in the U.S., "as close as possible," preferably in North America.

Bartiromo asked Greer how the Office of the U.S. Trade Representative would be affected during a government shutdown. He joked, "I asked to be furloughed," and said he'd like a month off. But, he said, given the goal of signing deals "with a lot of Southeast Asian countries" by the time leaders meet in Seoul at the end of October, all the negotiators will stay on the job during the shutdown. "We are going to pretty much be fully functioning," he said.

Bartiromo also asked Greer where trade is going with Mexico. He said that, ahead of the sunset review, the U.S. is urging Mexican government officials to follow USMCA rules in agriculture, telecommunications and energy.

"It doesn't make sense to talk about extending the USMCA when Mexico’s not even complying," he said.