Trade didn't make it into the Biden administration's seven immediate priorities. It's not a subject where analysts and former trade representatives expect to see big moves or a flurry of activity.

But that hasn't deterred newly-confirmed U.S. Trade Representative Katherine Tai.

"I don't expect, if confirmed, to be put on the back burner at all," Tai said at her confirmation hearing Feb. 25.

The Senate confirmed Tai to the cabinet position Wednesday on a vote of 98-0, after the Senate Finance Committee backed her unanimously.

Addressing China — from unfair trade practices to human rights abuses against Uyghurs — is a priority for the Biden administration, according to the president's 2021 trade agenda. Tai is well-suited to lead that strategy, given her experience in the Office of the U.S. Trade Representative as Chief Counsel for China Trade Enforcement and litigating disputes on China export controls. Plus, she speaks fluent Mandarin.

"She'd be in a very good position to set priorities on what should be the changes to seek with China," said Peter Allgeier, former deputy U.S. Trade Representative, prior to Tai's confirmation.

Tai will play a large role in shaping the Biden administration's trade strategy — with an approach that recognizes China as "simultaneously a rival, a trade partner and an outsized player," in the global trade landscape, Tai said. "I know firsthand how critically important it is that we have a strategic and coherent plan for holding China accountable to its promises," she said during her confirmation hearing.

Accountability won't take the unilateral form of tariffs as it did during the Trump administration, but that doesn't mean Biden and Tai will take a soft stance on China. In fact, Allgeier said he expects Biden to be "rather aggressive with China."

Business leaders can expect and plan for a trade policy marked by multilateralism, predictability and an eye toward resilience — but not necessarily one that reduces or eradicates the Section 301 China tariffs in the near term.

Holding China accountable

Trade experts said it would be difficult for the U.S. to roll back tariffs without something in return from China, as the administration could be perceived as soft on China.

"There are promises that China made that China needs to deliver on," Tai said.

Those promises include progress on issues such as intellectual property theft and technology transfer. They also include meeting the purchase requirements specified in the phase 1 trade deal. But China's imports of U.S. products in 2020 reached less than 60% of the commitment, according to the Peterson Institute for International Economics.

The Biden administration could use existing tariffs as a bargaining chip or leverage against China to ensure it delivers on its promises.

If China doesn't fulfill its commitments, the administration "will get tough pretty quickly and demand that [China] do so, or find methods to retaliate," said Gail Strickler, president of global trade for Brookfield Associates and former assistant U.S. Trade Representative. Strickler said any form of U.S. retaliation would be through planned and deliberate policy.

Tai is known as a skilled negotiator. Trade groups, former colleagues and lawmakers on both sides of the political aisle praise Tai as credible, tough, tenacious and a trailblazer.

"The best negotiator is always someone who can understand where the other is coming from, to understand the nuance, the perception," Strickler said. "We don't have anybody who would be better at that than Katherine."

Short- and long-term changes to China tariffs

Biden said in December he would not make any immediate moves on China tariffs, and trade analysts unanimously agreed that they didn't expect a reversal of the import duties in the near term.

What may change short term is the process for tariff exclusions. Tai said revising the Section 301 exclusion process is "very high on my radar," including the process by which businesses file for exclusions and the decision-making involved in which items are granted exclusions. Americans for Free Trade called on Tai to "immediately conduct a full review of and reinstate the Section 301 product exclusions upon being confirmed."

Exclusions granted on certain categories or products during the Trump administration will likely continue under Biden and Tai, Strickler said. USTR said in early March it would extend through September the product exclusions announced in December, many of which were related to COVID-19 response.

In fact, the administration will likely give exclusions from tariffs to more products than were granted exclusions during Trump's time, said Clete Willems, partner at Akin Gump and former deputy director of the National Economic Council, speaking before Tai's hearing. That's especially true for products related to fighting the COVID-19 pandemic.

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"I know that the 301 tariffs have touched directly a lot of people and have disrupted a lot of people's livelihoods."

Katherine Tai

U.S. Trade Representative

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Longer term, the tariffs will be an issue to tackle.

Damon Pike, leader of BDO's Customs & International Trade practice, called the 301 tariffs "the big kahuna."

From lists 1 through 4, the tariffs cover nearly the entire value of goods that the U.S. imports from China. Importers and trade groups largely disagreed with the Trump administration tariffs on China, in terms of the duties as well as the process of announcing and implementing them. The tariffs increased costs on imports from China on short notice and left procurement leaders with few alternatives due to established product supply chains rooted in China.

"I know that the 301 tariffs have touched directly a lot of people and have disrupted a lot of people's livelihoods," Tai said at her hearing.

Tariffs Hurt the Heartland estimated consumers have paid $68 billion since the start of the trade war, according to a Feb. 18 release. The American Action Forum said the China tariffs increased consumer costs by about $53 billion annually. And the U.S.-China Business Council said the trade war resulted in the loss of 245,000 jobs.

"There's going to be a concerted effort to come up with a policy that eliminates the China tariffs eventually," Pike said.

When, by how much and on which products is an open question.

If China agrees to repeal its retaliatory tariffs imposed on the U.S., the two nations might engage in a "mutual step down of tariffs," said Allgeier.

Willems said supply chain leaders should expect lists 1 and 2, totaling $50 billion worth of imports from China, to remain "for the foreseeable future," because the targeted goods could be purchased from other markets. "They were really designed to be more harmful to China than they were to the U.S.," he said. But tranches three and four may be up for consideration during this presidential term, provided that the U.S. receives something in return from China.

Pike advised clients to factor existing duty levels into their pricing for 2021. "Maybe in 2022, we'll have some measurable progress," Pike said. "Then maybe some glimmer of hope on the horizon that these tariffs will be, if not done away with in one fell swoop, at least put in a phase-out schedule."

Bob Davis, senior editor at The Wall Street Journal, expects a rollback on some China tariffs by the end of the year. "But I think it will be slow," Davis said on a Flexport webinar in February. "Expect a substantial amount of tariffs for a substantial amount of time."

Different leaders, different priorities

The "slow" rollback is a reflection of the times in which trade policy is not the top agenda item. That slot is filled by the COVID-19 pandemic.

Biden is also a "foreign policy guy" rather than a trade person, Willems said, so trade will be a second-tier issue for the administration.

That's in contrast to Trump, who "was obsessed with the bilateral trade balance," Allgeier said.

"He woke up in the morning thinking about the trade deficit and how to fix it," Willems said.

Trump's attitude toward the trade deficit resulted in unilateral actions aimed at balancing the values imported from and exported to China. Trade actions moved at a rapid clip. He often announced tariffs on short notice, via tweet, that sent supply chains scrambling to import goods and get them to U.S. shores before duties took effect.

"It really was an unprecedented amount of action on China and on trade," Willems said. What Trump did in two weeks, many administrations do in four years, he said.

Trump's trade actions didn't end with China. He imposed tariffs on many countries and trade groups historically considered to be U.S allies, such as Canada, Mexico and the European Union. Trump took a "go it alone approach" to trade, according to Sen. Michael Bennet, D-Colo.

But Biden has emphasized multilateralism and working with allies in a united front against China, a position Sen. John Cornyn, R-Texas, agreed with during Tai's hearing.

"The one thing we have that China does not have is friends and allies," Cornyn said. "And I think we improve our negotiating position on economic and national security matters by allying with our friends."

Aligning with other nations could have the byproduct of reducing trade barriers and tariffs. This is already beginning to play out in the early days of the Biden administration.

The U.S. and the U.K. jointly announced on March 4 a four-month suspension on tariffs embroiled in an aircraft dispute that have affected many food and beverage supply chains, noting the suspension would allow the two nations to "focus on COVID recovery and other shared goals."

The next day, the U.S. and EU announced a four-month suspension on tariffs related to the aircraft dispute. They committed to finding a solution that includes "addressing the trade distortive practices of and challenges posed by new entrants to the sector from non-market economies, such as China."

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"There's going to be a concerted effort to come up with a policy that eliminates the China tariffs eventually."

Damon Pike

Leader of BDO's Customs & International Trade practice

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Several experts described this year as a "pause" on significant trade actions as Biden's team gets its bearings and addresses, first and foremost, the pandemic.

That allows supply chain managers more predictability and a chance to "go back and check the boxes on all the basics," Pike said, such as examining customs values, rules of origin compliance and operating margins.

When the administration makes trade policy changes, the process will involve "fewer sudden swings and variables that would lead to extra costs," said Jennifer Lissman, general manager at TOC Logistics International.

Still, managers need to stay attuned to trade policy developments, as changes could affect rules and costs around imports and exports. "Biden has the potential to wield tremendous influence over trade policy, tariffs and indirectly, global supply chains," Maine Pointe CEO Steve Bowen said.

Trade meets supply chain resilience

The backdrop of COVID-19 puts trade in a different lens for policymakers. The pandemic shed light on the United States' overreliance on foreign nations for critical goods, such as pharmaceuticals and personal protective equipment. It made clear that trade policy and supply chain risk management are intertwined.

Tai described trade as "part of a larger strategy that relates to our supply chain resilience." And Biden's trade agenda names the goal of promoting supply chain resiliency, particularly for critical supplies.

The president signed an executive order in late February, directing a 100-day review of supply chains that assesses risks and requires government agencies to recommend policies addressing those risks. The 100-day review will examine supply chains for pharmaceuticals, large capacity batteries, critical minerals and semiconductors.

Further reviews would assess supply chains with single or dual suppliers, as well as dominant supply of essential goods "by or through nations that are, or are likely to become, unfriendly or unstable," the order states. "It is the policy of my Administration to strengthen the resilience of America’s supply chains."

Resilience could take the form of safety stock. Lissman predicted supply chains would carry more inventory as one way to increase resilience.

Supply chain professionals are divided on whether they plan to increase inventory. In a Gartner survey, 43% said they are investing in increasing safety stock, but 46% said they have no plans to invest in safety stock in the next two years. And just one in five respondents said they agreed lean supply chains will be less applicable in the future.

"The [just-in-time] supply chain of the past several decades will be gone," Lissman said.

Automotive's just-in-time supply chains are among the reasons why the industry is struggling with a semiconductor shortage.

Several senators at Tai's hearing raised questions around securing access to rare earths and semiconductors in short supply. Cornyn asked Tai what role the USTR plays in "bolstering our vulnerable supply chains."

"A lot of the assumptions we've based our trade programs on have maximized efficiency without regard to the requirement for resilience," Tai said, alluding to automotive's lean operations. "Trade policy itself needs to be rethought and reformed with resilience and strategy in mind."

China's inevitable presence

Resilience could also take the form of reshoring, although many experts are skeptical of the extent to which supply chains will shift back to the U.S.

"I don't think reshoring is going to be as dramatic as sometimes people portray it," Allgeier said, adding that diversification is more likely. A UBS report called widescale supply chain relocation "overhyped."

Alison Stafford Powell, partner at Baker McKenzie, agreed that there won't be a "massive rush" to reshore supply chains. "You can't just move the supply chain overnight, and it's incredibly expensive to do so," she said. "For a lot of companies that we talk to, it doesn't actually make a lot of sense."

Many supply chains have instead adapted to global risks by employing a China +1 strategy. It's a way to add resilience without a complete decoupling from China where supply chains have deep roots.

"Supply chain leaders should not write off China, as China’s growth, strength and presence in the international trade community is inevitable," Bowen said.

China's inevitable presence does not come risk-free. Forced labor and human rights are a concern in supplier bases connected to China, and experts predict this administration will take a tougher stance on those issues.

Sen. Sherrod Brown, D-Ohio, asked if Tai would make cracking down on forced labor in China a top priority.

"Yes, Senator Brown," she said in response. "I think that the use of forced labor is probably the crudest example of the race to the bottom."

Customs and Border Protection has been cracking down on imports tied to the Xinjiang region of China and Uyghur labor since before Biden assumed office.

On Jan. 13, the agency issued its most sweeping withhold release order to date. The order states CBP will detain any cotton and tomato imports produced in China’s Xinjiang Uyghur Autonomous Region that arrive at U.S. ports of entry. That includes downstream goods, such as apparel and canned tomatoes, produced outside the region but containing cotton or tomatos from XUAR.

The burden of proof will be on supply chain managers to have records of origins and tiers of their products.

If a shipment is detained, the importer must submit documentation that traces the product's supply chain from origin to destination, such as production records, transportation documents or employee wage payment receipts, CBP listed as examples.

"This administration is not going to turn a blind eye" to forced labor, Strickler said. "The days of being able to say, 'I didn't know,' are over."