Trump's China policies left US more vulnerable: Treasury secy Janet Yellen

Treasury Secretary Janet Yellen says former President Donald Trump's policies toward China left America more vulnerable and more isolated in the global economy, a rare jab by her at the front-runner for the Republican presidential nomination.

Yellen, in prepared remarks to be delivered at a US-China Business Council event Thursday night, says the Trump administration failed to make investments at home in critical areas like infrastructure and advanced technology, while also neglecting relationships with our partners and allies that had been forged and strengthened over decades.

Her comments come as the U.S. rebuilds its relationship with the Asian superpower, including a November meeting between US President Joe Biden and Chinese President Xi Jinping in San Francisco. The two nations agreed to curb the production of illicit fentanyl, a deadly component of drugs sold in the United States, and agreed to resume military-to-military communications.

 

Yellen, who rarely comments on the previous administration's approach on trade, said Trump-era policies on China left America more vulnerable and more isolated in a competitive global economy that demands that nations take exactly the opposite approach."

It damaged our global standing and meant significant missed economic opportunities for American firms and workers," she says.

In her speech, previewed for the press ahead of the event, Yellen highlights the Biden administration's strategy of strengthening relationships with like-minded nations through friend shoring with nations like South Korea, Vietnam, Japan, India and Indonesia.

Over the past three years, the Biden administration has course-corrected," she says. We're investing at home through President Biden's Investing in America agenda," citing new laws on infrastructure, climate and semiconductors, among others.

The Biden administration has, however, kept in place some major Trump-era policies that are punishing to China, including tariffs on select Chinese goods imported into the United States.

In an interview with The Wall Street Journal in May, Yellen said the US wouldn't likely lower the tariffs.

I can imagine some adjustments taking place to rationalise the tariff structure, but my sense is the general feeling in the administration is that it's not appropriate to lower the tariffs, she said.

In addition, Biden signed an executive order over the summer designed to regulate and block high-tech US-based investments going toward China, a move his Democratic administration said is based on protecting national security. And in 2022, the U.S. moved to block exports of advanced computer chips to China.

Eswar Prasad, a Cornell trade policy professor, said there are major differences between the way the two administrations have approached the US-China economic relationship.

The Biden administration has maintained a tough but constructive approach toward China, prioritising national security considerations but also seeking avenues of cooperation and progress in areas with mutual benefits, Prasad said. The Trump administration took a more hostile and aggressive approach that was not tempered by a recognition of shared interests between the two countries."

Goods and services traded between the two nations totaled a massive USD 758.4 billion in 2022, according to the US Trade Representative. However, Chinese investment in the US is decreasing, to USD 28.7 billion in 2022, down 7.2 per cent from the prior year.