The U.S. Trade Policy Under Trump’s New Team – Decoupling from China as a Generational Challenge

President-elect Donald Trump’s administration signals a bold reshaping of U.S.-China trade relations. At the forefront is Jamieson Greer, nominated as the U.S. Trade Representative, who considers China a “generational challenge” and advocates for a strategic decoupling of the two economies. As a former chief of staff to Robert Lighthizer during Trump’s first term, Greer played a critical role in implementing tariffs on Chinese imports. His selection reinforces Trump’s stance of economic nationalism and prioritizing U.S. interests in trade policy.

Trump has already unveiled aggressive measures, including a 25% tariff on imports from Canada and Mexico, and an additional 10% on Chinese goods. Greer’s testimony before the U.S.-China Economic and Security Review Commission in May provides insight into the administration’s future policies, including combatting Chinese companies’ attempts to circumvent U.S. tariffs by relocating operations to third countries.

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“There is no silver bullet,” Greer stated, acknowledging the short-term economic pain associated with strategic decoupling. However, he emphasized the long-term cost of underestimating China’s threat, setting the tone for what may be a combative era in trade relations.

Key Policy Recommendations

Revoking China’s Trade Privileges

Greer advocates for Congress to revoke China’s “permanent normal trade relations” (PNTR) status, granted in 2000 during its entry into the World Trade Organization. This change would categorize China alongside countries like Cuba and North Korea, subjecting its $500 billion in annual exports to the U.S. to significantly higher tariffs. Revocation would symbolize a major policy shift, heightening economic tensions.

Strengthening Customs Rules

To combat Chinese companies evading tariffs, Greer proposes stringent customs rules. He suggests that goods produced by Chinese firms in other countries, or products with significant Chinese content, should lose preferential treatment under free trade agreements. This targets Chinese manufacturers operating in countries like Mexico, leveraging trade deals like the USMCA.

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These measures aim to close loopholes enabling Chinese firms to avoid tariffs, directly addressing Beijing’s adaptive trade practices while pressuring U.S. allies to enforce stricter rules.

Protecting Against Economic Coercion

Greer calls for laws to shield U.S. companies from China’s economic retaliation. This includes using tariff revenue to support affected businesses and empowering the president to act against foreign firms exploiting U.S.-China trade disputes.

For instance, if Beijing blocks an American company’s market access, Washington could compensate the firm or retaliate against third-country competitors filling the void. This approach reflects an assertive trade strategy, balancing market fairness and economic resilience.

Expanding Export Controls

Export controls, currently targeting advanced semiconductor technologies, may broaden under Greer’s vision to include aircraft, transportation equipment, and legacy semiconductor manufacturing tools. These restrictions aim to deny China access to critical industries while maintaining U.S. technological superiority.

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The Biden administration has already tightened export controls, pressuring allies like Japan and the Netherlands to follow suit. Greer’s approach may further escalate these efforts, deepening China’s challenges in acquiring key technologies.

Regulating Outbound Investments

Greer supports granting the U.S. government authority to review and potentially block outbound investments into China across strategic sectors. Such controls would prevent capital from flowing into industries deemed critical to U.S. economic or national security.

Complementing existing export restrictions, this policy would directly affect sectors like semiconductors, artificial intelligence, and quantum computing. While China’s Foreign Ministry has condemned these moves, Washington’s bipartisan consensus on limiting Beijing’s access to advanced technologies reflects a unified front.

Boosting Domestic Manufacturing

A critical pillar of Greer’s recommendations is bolstering U.S. manufacturing capabilities. Drawing inspiration from the CHIPS and Science Act and the Inflation Reduction Act, he advocates expanding incentives for sectors such as pharmaceuticals, robotics, automotive, and telecommunications.

For example, the CHIPS Act allocated $39 billion to enhance domestic semiconductor production, a vital step in reducing reliance on Asia for critical electronic components. Greer’s focus on self-reliance underscores the administration’s determination to fortify U.S. supply chains against potential disruptions.

Challenges and Implications

Strategic decoupling from China will not come without costs. Higher tariffs could increase prices for American consumers and businesses, while retaliatory measures from Beijing could hurt U.S. exporters. Additionally, global supply chains—intertwined with Chinese manufacturing—may face disruptions, affecting industries from electronics to automotive production.

However, Trump’s administration appears undeterred, prioritizing long-term national security and economic sovereignty over short-term economic pain. Greer’s roadmap envisions a recalibration of U.S. trade policy to counter China’s growing economic and geopolitical influence, reshaping global trade dynamics.

Conclusion

Under Greer’s leadership, the U.S. trade policy will likely embrace a hardline approach, prioritizing economic decoupling from China as a strategic imperative. While this strategy involves significant risks, its advocates argue that the stakes—ensuring U.S. economic independence and countering China’s rise—justify the costs.

The world is watching as the Trump administration prepares to usher in a new era of trade relations, potentially redefining U.S.-China dynamics and reshaping the global economic order. Whether this approach succeeds will depend on its execution and the resilience of global markets in the face of heightened trade tensions.