Tai Says Tariffs 'Incredibly Useful' to Counter Unfair Trade

U.S. Trade Representative Katherine Tai, speaking at the University of Chicago, sidestepped a question about whether the administration would change the Section 301 tariffs, saying that although "there's a lot of drama and emotion around tariffs," the China tariffs are "the least interesting aspect of the management of our trade and economic relationship."

Tai said that industrial policy, such as the CHIPS Act and the Inflation Reduction Act, are the "offense" in economic competition, and is the more interesting question than tariff barriers, which she characterized as defense.

"Tariffs are a really important tool of defense. You’re trying to use the tariffs to counterbalance the advantages that have come from unfair trading practices," she said.

Her interviewer asked her how useful tariffs are, and she replied, "It’s all about how you use them and if you use them smartly, and if you use them with a goal in mind of addressing unfairness, in leveling the playing field, they’re incredibly useful."

In the question and answer period at the end of the program, one student asked her if Mexico doesn't have the right to protect its culture by keeping out white corn that is genetically modified. She acknowledged that the broadening of trade agreements to cover all sorts of issues is controversial, but noted that Mexico, the U.S. and Canada all promised "not to regulate arbitrarily," and to base food safety import regulations on science. She said that the cultural argument is something Mexico can offer as a defense at the USMCA dispute panel.

Another student asked her about trade with Africa, particularly East Africa. Tai said that the African Growth and Opportunity Act is Congress's "pride and joy," and that conversations were underway on how to update AGOA and how long it should be renewed for.

She noted that the administration is in a trade negotiation with Kenya, trying to use its new approach that focuses less on market liberalization, and said that they intend to build out whatever the agreement is over time, recognizing that Kenya's approaching graduation from AGOA due to its income growth.

More broadly, she said, the U.S. needs "to come up with post-colonial patterns of partnership with advanced economies and developing economies."