Ms Tai said she would have “frank conversations” with her Chinese counterparts in coming days, during which she would “defend – to the hilt – our economic interests”.
She outlined fears that China would further damage US steel, solar panel, agriculture and semiconductor industries by pumping massive government subsidies into their equivalent industries.
However, she also made concessions to Beijing, confirming that the US would “start a targeted tariff exclusion process”.
“We will keep open the potential for additional exclusion processes, as warranted,” she said.
For now, however, she said that China had not changed its tactics and a new approach by the Biden administration was now required.
She said China’s trade policies had “reinforced a zero-sum dynamic” around the world “where China’s growth and prosperity come at the expense of workers and economic opportunity here in the US and other market-based, democratic economies”.
“For too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world,” she said in a speech delivered to the Centre for Strategic and International Studies.
“It is increasingly clear that China’s plans do not include meaningful reforms to address the concerns that have been shared by the United States and many other countries.”
She said the new approach of the Biden administration could create trade opportunities for Australia.
“The core of our strategy is a commitment to ensuring we work with our allies to create fair and open markets,” Ms Tai said.
“As our economic relationship with China evolves, so too must our tactics to defend our interests.
“We need to be prepared to deploy all tools and explore the development of new ones, including through collaboration with other economies and countries. And we must chart a new course to change the trajectory of our bilateral trade dynamic.”
While Ms Tai’s language indicates openness with allies, she was clear that the US was not about to abandon its increasingly protectionist approach to US industries that had been hurt by China.
“President Biden has been clear: the key to our global competitiveness and creating shared prosperity begins at home.
“We must invest in research and development and clean energy technology, strengthen our manufacturing base, and incentivise companies to Buy American up and down the supply chain.
“I intend to deliver on President Biden’s vision for a worker-centred trade policy in the US-China trade dynamic.”
Ms Tai noted the key areas of steel and solar energy component production as two where China’s state-controlled economy had undermined American industry.
“Solar cells. The United States was once a global leader in what was then an emerging industry. But as China built out its own industry, our companies were forced to close their doors,” she said.
“China represents 80 per cent of global production – and large parts of the solar supply chain don’t even exist in the United States.”
China now also produces more steel in a single month than the United States and most other countries in the world produce in an entire year.
“In the US, employment in the steel industry has dropped 40 per cent since 2000,” Ms Tai said.
“[In 2000] China started building its own steel plants. Its production capacity ballooned, depriving US steel companies of valuable market opportunities. Low-priced Chinese steel flooded the global market, driving out businesses in the United States and around the world.”
She said “agriculture has not been spared either”, adding: “We also see troubling dynamics playing out today with the semiconductor industry.”
In January 2020, the Trump administration and the Chinese Communist Party agreed to what is commonly referred to as the “Phase One Agreement.”
This included commitments from China regarding intellectual property and technology transfer, purchases of American products, and improved market access for the agriculture and financial services sectors.
“Our analysis indicates that while commitments in certain areas have been met, and certain business interests have seen benefits, there have been shortfalls in others,” Ms Tai said.
“We continue to have serious concerns with China’s state-centred and non-market trade practices that were not addressed in the Phase One deal.”
These concerns will be the basis of her discussions with her Chinese counterpart in coming days.
“We will discuss with China its performance under the Phase One Agreement. China made commitments that benefit certain American industries, including agriculture, that we must enforce,” Ms Tai said.