Jan 30, 2022 - Politics & Policy

Scoop: Inside Biden aides' China fight

U.S. Trade Representative Katherine Tai is seen speaking.

Katherine Tai. Photo: Fabrice Coffrini/AFP via Getty Images

U.S. Trade Representative Katherine Tai is working to repair her relationship with national security adviser Jake Sullivan after a Situation Room confrontation in which she accused him — in front of colleagues — of undermining her in the press, people familiar with the matter tell Axios.

Why it matters: The rare window on personal clashes inside the Biden White House also illuminates the tension between the president's trade and national security advisers about how and when to execute aspects of their China strategy.

  • The dispute centers more on tactics and turf and is unlikely to derail Biden's pursuit of a digital trade deal with Indo-Pacific allies after the Trump administration scuttled Obama-era plans for a Trans-Pacific Partnership (TPP).
  • But the heated confrontation shows how future debates can take an ad hominem turn.
  • In a twist, Tai's chief of staff, Nora Todd, is leaving her post to start a new position Monday — on Sullivan's staff at the National Security Council.

What they’re now saying: “Katherine and I are all-good — not Washington all-good — regular all-good. The only beef we deal with is beef for export,” Sullivan told Axios.

  • Tai said: “Jake is a critical partner in delivering on the president’s vision for a worker-centered trade policy that yields results for ordinary Americans.”

How we got here: During a September meeting in the Situation Room attended by Cabinet members, NSC officials and other staff, Tai accused Sullivan of leaking to the press to undermine her authority.

  • Witnesses, including Commerce Secretary Gina Raimondo, looked stunned, sources familiar with the matter told Axios. Raimondo's office declined to comment.
  • Stories about the confrontation, as well as broader tensions between USTR and the NSC, have since been circulating throughout the West Wing.

The intrigue: Sources said Tai was outraged by stories during September in Bloomberg and The Wall Street Journal reporting the administration was considering investigating Chinese industrial subsidies under Section 301, which could lead to new tariffs.

  • The reports — including an anonymous quote in The Journal that the administration “wants it to be a full-court press” — landed just as Tai’s office was wrapping up its own review of China trade policy.
  • She assumed NSC officials had planted the stories to undermine her own review, the sources said.
  • Her position ultimately prevailed: The administration didn't announce any 301 tariffs before she unveiled the new Biden-Harris approach to the China trade relationship during an Oct. 4 speech.
  • USTR is a Cabinet-level position that requires Senate confirmation and carries the rank of ambassador but lives inside the Executive Office of the President. Tai, who is fluent in Mandarin, is the first Asian American person to serve in the role.

Go deeper: Tai, formerly chief trade counsel for the House Ways and Means Committee, has taken pains to involve lawmakers and labor leaders as the Biden administration recalibrates the country's trade agenda.

  • She wants stakeholders to feel they’re shaping trade policies and processes and avoid making them feel blindsided by any final international agreement.
  • While her deliberative approach has been too slow for some administration officials, she retains the trust of key Democratic lawmakers.
  • "Ambassador Tai is an indisputably effective advocate for the Biden administration and its priorities," Rep. Richard Neal (D-Mass.), chairman of the Ways and Means Committee, told Axios.
  • "Members of Congress deeply admire her expertise, her character and her commitment to supporting U.S. workers and strengthening our economy through trade policy."
  • AFL-CIO President Liz Shuler said: "President Biden has championed policies that put workers first. And one of the greatest success stories has been Ambassador Tai’s approach to trade."

What's at stake: A digital trade deal is an alternative to TPP and a way to show allies and partners the U.S. wants to engage in the region.

  • The TPP initiative would have aligned approximately 40% of the global economy with the U.S., but former President Obama wasn't able to conclude negotiations or get congressional approval.
  • Eleven of the remaining countries — from Australia to Chile — forged ahead with negotiations, and a modified version of the alliance entered into force in 2018.
  • Last September, China applied to join the very pact designed to counter it.
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