Strategic Decoupling: New Trade Representative Aims for Tough Stance on China
Donald Trump’s pick for the top trade job considers China a “generational challenge” for the United States and advocates for a policy of strategic decoupling from the country. Jamison Greer, nominated for U.S. Trade Representative, has a history of taking a hard-line approach to Beijing. Greer played a key role in imposing tariffs on China during Trump’s first term as former chief of staff to then-Trump Trade Representative Robert Lighthizer.
Prior to taking office, they outlined a series of possible policies to address what he sees as the threat posed by China. In testimony before the U.S.-China Economic and Security Review Commission in May, Greer proposed preventing Chinese companies from relocating to other countries to circumvent U.S. tariffs.
He believes this approach is necessary, despite acknowledging it could result in short-term economic pain.
“There is no magic bullet, and in some cases the pursuit of strategic decoupling from China will cause short-term pain,” Greer stated. “However, the cost of doing nothing or underestimating the threat posed by China is much greater.”
One specific policy Greer advocates for is canceling China’s “Permanent Normal Trade Relations” status. China obtained this status in 2000 when it prepared to join the World Trade Organization, receiving similar tariff treatment to most other countries. If repealed, China would be placed in the same category as Cuba, North Korea, Russia, and Belarus, subjecting all direct Chinese exports to the United States (estimated at roughly $500 billion last year) to significantly higher taxes. This move would effectively rewind the trade relationship to before 2000, purging China’s favored status and making it more difficult to treat it as a reliable partner for goods destined for American consumption.
Defense against “Stealth” Imports
Greer’s proposals extend beyond direct imports. He also aims to curtail the entry of Chinese goods into the United States through other countries.
To achieve this, he suggests ensuring that if a Chinese company or its subsidiaries manufacture a product elsewhere, or if the Chinese component content in the product exceeds a predetermined threshold, it should not benefit from preferential treatment under free-trade agreements. This strategy seeks to preempt attempts by Chinese companies to evade tariffs by relocating operations to countries like Mexico, which has a free trade agreement with the United States. This tactic already sparks anxieties among businesses with global supply chains.
Indeed, some Chinese companies have already capitalized on the trade agreement between the United States, Mexico, and Canada by shifting operations to Mexico to circumvent existing tariffs. Greer’s proposals directly target this growing trend, aiming to shut down what many see as loopholes.
The goal, according to Greer, is to level the playing field and ensure that China does not continue to gain advantages from a trade system he believes it fundamentally exploits. His bold vision for a more confrontational trade policy is poised to reshape the economic relationship between the two world powers.
What are the potential economic consequences of strategic decoupling between the US and China?
## Strategic Decoupling: A Tough Stance on China
**Host:** Welcome back to the show. Today we’re discussing the nomination of Jamison Greer as the new U.S. Trade Representative. Mr. Greer has a history of taking a hard line on China, and his approach is raising eyebrows both at home and abroad. Joining us to dissect this policy shift is Dr. Susan Lee, an expert on US-China relations from the Brookings Institution. Dr. Lee, thanks for being here.
**Dr. Lee:** It’s my pleasure to be here.
**Host:** Dr. Lee, Mr. Greer has called China a “generational challenge” for the United States and advocates for ”strategic decoupling.” What exactly does that entail?
**Dr. Lee:** Strategic decoupling is a term used to describe the process of reducing economic and technological interdependence between the US and China. This can involve a range of measures, from imposing tariffs and export controls to restricting investments and technology transfer. Mr. Greer’s history as chief of staff to former Trade Representative Lighthizer suggests a preference for aggressive measures like those we saw during the Trump administration’s trade war. [[1](https://www.cnn.com/2024/11/26/politics/jamieson-greer-us-trade-representative-trump/index.html)].
**Host:** Mr. Greer has even proposed cancelling China’s “Permanent Normal Trade Relations” status. How significant would that be?
**Dr. Lee:** That would be a major escalation, essentially throwing out decades of established trade rules. It would mean treating China like a non-market economy, which could lead to significantly higher tariffs and restrictions on trade. The fallout could be damaging to both economies and disrupt global trade patterns.
**Host:** Mr. Greer argues this short-term pain is necessary to address the long-term threat posed by China. Do you agree?
**Dr. Lee:** It’s a complex issue. While concerns about China’s economic and military ambitions are legitimate, a confrontational approach with potentially severe economic consequences may not be the most effective solution. There’s a need for a nuanced strategy that balances competition with cooperation. We should remember that a healthy global economy benefits everyone, including the U.S.
**Host:** Thank you, Dr. Lee, for your insights. This is certainly a story we’ll be following closely.
