Greer Sees Managed Trade With China. He Explains Case for U.S. Stakes in Companies.

Jamieson Greer, U.S. trade representative, during an Economic Club of New York luncheon on Monday. (Victor J. Blue/Bloomberg)

Key Points

• U.S. Trade Representative Jamieson Greer advocates for managed trade with China, maintaining 55% tariffs as the status quo.
• Greer stated the U.S. is not seeking decoupling but aims to balance trade and reduce dependence on China for critical goods.
• The U.S. is taking stakes in companies like MP Materials and exploring international partnerships to strengthen its industrial base.

U.S. Trade Representative Jamieson Greer on Tuesday said he would like to see more managed trade with China, described the 55% levies on the world’s second largest economy as the status quo and explained the rationale for taking U.S. stakes in companies to shore up critical sectors.

At a fireside chat held by the Economic Club of New York, Greer said the current average tariff rate with China is here to stay. “If you ask the president if we have a deal with China, he would say that is the deal,” Greer says.

The two sides had agreed to put further tariff increases on hold until later in the year after months of negotiations and an earlier escalation that raised tariffs on China to 145%, paralyzing trade. More recently, the two countries have tried to maintain a relative detente ahead of a potential meeting between President Donald Trump and Chinese leader Xi Jinping.

Whereas negotiations with China during the first Trump term were “constructive and fairly technocratic”, Greer says talks now are constructive and cordial but some elements of the “wolf warrior” approach—characterized as a more confrontative stance—seen in foreign policy has leaked into the economic conversations. The good news though, he says, is that the two sides are meeting frequently, even at lower levels.
Greer stressed the U.S. wasn’t looking to decouple with China but rather better balance trade and reduce U.S. dependence on the country for critical things—ranging from antibiotics to critical minerals. That means continued trade in nonsensitive goods—consumer goods rather than aerospace, medical devices and other advanced manufacturing. “If we can find goods we can trade with each other, that is a confidence building step and probably takes some managed trade,” Greer says.

In response to a query about a possible Chinese invasion of Taiwan and Beijing taking control of Taiwan Semiconductor , which makes 90% of all advanced chips, Greer said: “If they turn the lights off on us, they turn the lights off on themselves. No one will accept a world where China has the most leading-edge chips.”

To avoid such a situation, Greer noted recent efforts to entice Taiwan Semi to build a facility in Arizona. The U.S. is also stepping up efforts to reduce its dependency on China for critical minerals, including magnets needed for military drones and autos that were at the center of trade escalations a couple months ago.

In addition to the recent 15% stake the U.S. took in miner MP Materials , Greer said the U.S. is “scouring the country” to find new start-ups to give them resources and talking with Malaysia, which has the largest capacity to refine the minerals outside of China, on leveraging its capabilities. The U.S. is also talking to Australia.

In response to queries about recent U.S. moves to take stakes in Intel and MP Material s, Greer noted the need for a different approach to strengthen the country’s industrial base amid a rising China, resurging Russia and international economic system that pushed manufacturing to China and elsewhere.

“Choosing key sectors, monetizing [the U.S.] balance sheet and taking a stronger role [in the private sector] is a much better result than totally nationalizing something or doing a redistribution of wealth,” Greer said. “That has—that is your alternative because the reality is the old system wasn’t working so something has to change.”

In response to a query about whether the U.S. would take a stake in Nvidia , Greer said: “If you talk to President Donald Trump he’d love a stake in every country that is doing well. We are trying to be creative in how we support business and U.S. policy at the same time.”

Investors and companies have been grappling with uncertainty around trade policy since the administration rolled out sweeping tariffs on April 2 and then recalibrated them. Those tariffs are now being challenged, with the Supreme Court expected to weigh in on whether they are legal later this year.

Greer’s advice: Focus on the tariffs and deals unveiled in early August, not April, to get a good sense of the structure of trade policy, regardless of how the higher court rules.

That framework includes the highest tariffs on China with the widest trade deficit, and lower tariffs on allies with trade problems and roughly 10% tariffs on neighbors in the Western Hemisphere.

As for America’s closest neighbors, Greer said his office put out a notice asking for comment on how it thinks the U.S.-Mexico-Canada trade agreement should be revised or updated.

Mexico, Greer said, isn’t abiding by some of the conditions of the trade agreement, which is up for review next year, in terms of energy, telecom and agriculture. “My office is quietly having conversations with the Mexicans on how we can come to better compliance in advance of our review because it doesn’t make sense of extending [the pact] if they aren’t complying with important parts of it,” he said.

Investors have been closely watching how the agreement could be revised given the amount of trade that falls under its purview. Greer also suggested the U.S. might look to have a separate conversation with Canada, adding to recent speculation that the U.S. might look to upend USMCA in favor of bilateral deals. “The U.S.-Canada relation is so different than the U.S.-Mexico relationship in so many ways. Why did we bundle it all together?” said Greer, who helped craft the trade pact during the first Trump term.

Greer also hinted at the prospects of signing finished deals with southeast Asian countries, such as Vietnam and Thailand, at the coming Asia-Pacific Economic Cooperation summit in Korea at the end of October.

But even with the deals and the uncertainty around the Supreme Court’s decision, Greer stressed tariffs would be a constant: “If the Supreme Court, against our expectation, goes against the president, we will have alternative tools to explore. But tariffs are going to be part of the policy landscape.”

Write to Reshma Kapadia at reshma.kapadia@barrons.com