Weller James

In this week’s WJ Insights: a foreshadowing of things to come with new tungsten and polysilicon tariffs, Xi sending messages to the incoming Trump administration on Taiwan, and Chinese firms are trying to localize EV battery production (but will it be enough to protect them from geopolitical headwinds?) For more insights, analysis and forecasting, subscribe at WellerJames.com. https://lnkd.in/gzyYhTzf

New semiconductor export restrictions are expected this week, along with additional restrictions on exports of high-bandwidth memory in December. Also, more Chinese companies are being added to the UFLPA entity list, creating new sourcing challenges for companies with Chinese suppliers. And, your shrimp is about to get more expensive. https://bit.ly/3Z54h90

We're excited to announce the launch of a new website, and with it, a new blog and newsletter! Each week, we'll be sharing geopolitical and international policy news, analysis, and forecasting for business leaders and anyone else who want to be better informed about what's coming next. Our first brief covers some of the top stories in trade from last week. If you find it helpful, please share and subscribe. WJ Brief: https://bit.ly/495OlrF #tariffs #geopolitics #China #trade #tradepolicy #Brazil

"Will U.S. trade policy ever return to how it was before the Trump administration?"  That's the wrong question. The right question is, "how far towards protectionism will the U.S. go?" And come January, the answers from a future Harris or Trump administration may not be as far apart from each other as you may think. In 2001, China joined the World Trade Organization, a global "club" where membership allows a country to enjoy certain benefits (like access to lower global tariffs) with certain obligations (like rules about subsidies). At the time, U.S. negotiators thought that bringing China into the WTO club would lead to higher standards of living in China, more freedoms for the Chinese people, and a more democratic China.  The next 20 years saw China become skilled at working the international system to its own advantage, reaping the benefits, and sidestepping the obligations. It pursued a zero-sum, "we win, you lose" approach to its trade relationships with the U.S., E.U. and others with forced technology transfer policies, cybertheft of U.S. trade secrets, massive subsidization of Chinese industrial champions, and more. The WTO wasn't set up to counter this behavior, or could not counter it in time, as entire U.S. industries sputtered and died. At the same time, China took a U-turn away from democratizing reforms towards oppressive authoritarianism. Fast forward to today: most of the Washington trade intelligentsia now agree that efforts to incorporate China into the global system as an equitable trading partner have largely failed. Rep. Kevin Brady (R-TX), who helped negotiate China's entry to the WTO in 2001, summed up the feeling of many in Washington: “I was convinced at the time that China needs to be part of the rules-based trading system in that it would accrue to the benefit of the U.S. in a significant way over time... now it’s clear China had no intention of living within a rules-based trading system.” Since the rules-based international system could not address the China threat, both the Trump and Biden administrations leaned on unilateral actions, trade restrictions, and protectionist tools like tariffs. Speaking about the Trump administration's China tariffs, Biden's Trade Representative Katherine Tai quipped at a Senate hearing, “the China tariffs are, in my view, a significant piece of leverage, and a trade negotiator never walks away from leverage." The Biden administration not only kept the tariffs in place but expanded them, along with a raft of other measures like restrictions on exports of semiconductors and a dramatic expansion of the use of sanctions. The takeaway? Trade protectionism as a policy approach now has broad bipartisan support, moreso than any time in the last 20 years - it's just a question of what tools, with whom, and how far. We'll dig into these questions in future posts. #internationaltrade #tradepolicy #trade #geopolitics #tariffs