Biden’s Trade Chief Slams China for ‘Weaponizing’ Trade Against Partners

US Trade Representative Katherine Tai slammed China for weaponizing trade against partner countries, the Biden administration’s latest criticism of the world’s biggest manufacturing power.

(Bloomberg) — US Trade Representative Katherine Tai slammed China for weaponizing trade against partner countries, the Biden administration’s latest criticism of the world’s biggest manufacturing power. 

Beijing “turns the spigot on when things are good, turns the spigot off when things are bad,” Tai told reporters Thursday in Seoul. The world’s second-largest economy “takes that reliance on trade with China and, frankly, weaponizes it.”

Tai’s comments come on the back of official meetings in South Korea with President Yoon Suk Yeol and trade officials. President Joe Biden’s administration is ramping up a “friend-shoring” pitch to countries including South Korea to deepen trade ties and curb China’s clout. 

South Korea is the sixth-largest US trading partner and a key ally as the Asian country produces a variety of high-tech products including chips and batteries rivaling those made in China.

South Korea’s economy was nearly upended in 2021 when China curbed exports of fertilizer including urea, a key input for diesel trucks. The vast majority of South Korea’s urea imports come from the export giant.

Factories in China also produce a substantive share of South Korea’s memory chips. That’s sparked some South Korean analysts to question whether tech firms including Samsung Electronics Co., the world’s largest memory maker by revenue headquartered in South Korea, should reduce their production in China, especially as the US boosts export restrictions on Beijing.

“That is a question that Korea is going to have to answer for itself,” Tai said. “We will be very happy to partner with Korea to work together towards a solution that works for both of us.”

South Korean chipmakers are expanding their footprint in the US, seeking to benefit from the subsidies in the US Chips and Science Act; Samsung is in the midst of building a $17 billion plant in Texas. South Korea also passed its own semiconductor incentive bill Thursday offering local companies tax breaks for manufacturing investments.

The US Chips Act comes with strings attached: Companies may be required to disclose information seen as confidential, including yields and costs. In his meeting with Tai on Thursday, Yoon shared company concerns of an “excessive level” of information disclosure, according to his office.

Tai said she was confident the two governments would be able to work through “sensitivities.”

“It comes down to a business decision,” she said during the media roundtable. “The business is going to have to decide how to value the information that’s being requested and how to value the amount of the incentive and whether or not it makes sense for their bottom line.”

Tai visited Seoul after a trip to Tokyo where she agreed to boost ties with Japan on key mineral supply chains, another of Biden’s efforts to reduce dependence on China.

The US push isn’t entirely welcome in Asian economies that still depend heavily on China for growth. On Thursday, Singapore Prime Minister Lee Hsien Loong urged the US and China to stabilize their ties and warned that a bifurcating global economy would have a “huge economic cost on countries.”

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