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Sarah Bianchi has been a longtime policy aide to a string of leading Democrats, starting as a healthcare advisor to Vice President Gore. During the Obama administration, she was policy director to Vice President Biden from 2011 to 2014 and focused mainly on domestic issues. She later served as chair of the policy advisory board at the Biden Institute at the University of Delaware. Her appointment as President Biden’s Deputy U.S. Trade Representative was something of a surprise because that job usually goes to a trade policy veteran. Bianchi’s long experience with Biden, however, gave USTR a direct line to the president’s inner circle. In her job, Bianchi oversaw negotiations for the trade portion of the Indo-Pacific Economic Framework, the administration’s main economic outreach to Asia. Although it was intended to counter China’s economic influence in the region, the administration stressed that IPEF wouldn’t become a traditional trade deal where the U.S. trades tariff reductions for concessions from Asian countries on other matters. Before Bianchi left office in early 2024, the IPEF parties failed to reach a trade deal because of disagreements on labor policies and other matters, although discussions continue. This interview is part of Rules of Engagement, a series by Bob Davis, who covered the U.S.-China relationship at The Wall Street Journal starting in the 1990s. In these interviews, Davis asks current and former U.S. officials and policymakers what went right, what went wrong and what comes next.

Q: You were a policy advisor in so many different administrations, dealing with many different issues, but trade wasn’t one of them. How did you try to get up to speed? 

A: When I worked for then-Vice President Biden, I covered economic issues and there were international connections. During the Trump administration, I followed his trade efforts quite closely. They were really disruptive and distracting to global markets. 

When COVID came about, supply chains became very salient. How to think about China, how to think about rebuilding with allies, and how to bring the Biden ethos and brand to some of those issues also became of interest. I talked to people who had been in traditional trade roles, but also to a lot of labor stakeholders who had been involved. Having worked with Biden for so long, I knew his commitment to that constituency. 

President Trump and President Biden are so different in almost every way they approach policy, but they both have an instinct and an interest in domestic industries and ‘Build-it-in-the-USA.’ Trump is more tariff-oriented, and Biden is much about using incentives, a range of tools, and bringing in allies. 

In the job was there anything that surprised you? 

Initially, I thought the job would be very much focused on China. In the early days, I engaged with my Chinese counterpart to see if we could have the Chinese make good on some of the Phase One agreement commitments. It quickly became clear that they weren’t going to meet the terms of that deal in really any way and in fact were asking for concessions in negotiations that had nothing to do with the deal. [During the Trump administration, the U.S. concluded the Phase One trade agreement with China where Beijing promised to vastly increase purchases of U.S. goods, among other pledges.]

Then it became a much more complicated relationship. The job ended up being much more about strengthening alliances in the region.

The second thing that surprised me was how much the energy transition was on people’s minds, no matter where you went. For example, Korea’s role in the EV battery space is so critical. You go to Malaysia and they’re talking about their rare earths. Also, how do countries experience the IRA? [The Inflation Reduction Act has numerous subsidies to spur domestic production of clean-energy technologies.]

You mentioned trying to work with the Chinese. My impression is that the administration really didn’t try to enforce the Phase One deal. 

We engaged on the staff level on some of the components that [former U.S. Trade Representative Robert Lighthizer] says are where China did make some progress. At the staff level, we were continuing to push. There were only so many enforcement mechanisms available in that agreement. Then the overall tenor of the relationship with China changed after the balloon incident. [The U.S. shot down a Chinese spy balloon that loitered over the U.S. in February 2023.]

The administration has instead focused on some of the higher-risk issues around chips where there was so much national security at stake. How to navigate that component, how to build things at home, how to deconflict some of these supply chains became more of the focus. That makes a lot of sense rather than punishing China for missing some commitments they were never serious about in the first place.

In the Phase One deal, if companies had some problem in China they could complain through a dispute-resolution mechanism. Was that ever used? 

Not in a seriously meaningful way. I’m not sure that a lot of industries felt those provisions were as meaningful as the Trump administration claimed they were.

Was there ever an effort to try for a Phase Two agreement? [The Trump administration had said it would push for agreements on issues, such as subsidies and the behavior of state-owned firms, in a follow-up deal. The Chinese never signaled interest in such an agreement.] 

I think a number of trade deals [under Trump] were more bluster than substance. For example, with Korea, [and the U.S.-Korea Free Trade Agreement], it was, ‘We’re gonna to pull out; it’s terrible.’ Then they went into a whole set of negotiations and made a few cosmetic changes to the deal. 

[With the Phase One deal], it’s not that there was this big juggernaut of substance that we could build on. What the Biden administration did right was to reengage with allies in the region and with Taiwan in a really important way. 

With regard to China, we focused on priorities that were consistent with the priorities that Biden was making throughout the government — an emphasis on high technology, an emphasis on the semiconductor industry, and the energy transition. To me, that ‘small yard, high fence’ approach felt like a more strategic path forward. 

Early in the administration, the U.S. Trade Representative was considering bringing a section 301 case against China on subsidies. You were close. I was even briefed on it by a government official. What happened to that?

[Section 301 of the 1974 Trade Act gives the U.S. a variety of enforcement actions it can take to counter unfair trade practices. The Trump administration used section 301 to levy tariffs against three-fourths of Chinese imports into the U.S. Different reports said the Biden action was stopped either because of second thoughts by USTR or opposition from the National Security Council or Treasury.]

There were a lot of differing views in the administration about the next best step [concerning China trade]. There were certainly things that the Trump 301 did not get to, including non-market policies and practices. One of the points that people at USTR like to make is that the remedies under 301 aren’t just tariff increases. It can be used as an argument for subsidization of our own industry here at home. 

There were people who thought we could do that anyway — that’s what we’re doing with the Inflation Reduction Act and the Chips Act. [Both measures include subsidies for domestic industries.] Everybody had a different way of driving the same issues. It settled with a big push for the Inflation Reduction Act. That was very much designed to build a friendly supply chain with U.S. allies and trading partners. With the Chips Act, the same thing, in that there are important subsidies with restrictions on how much you can expand in China. There were also very serious industry-wide export controls that were more impactful than anything from the Trump 301 review.

The thrust of what the president was trying to achieve was to make our own industries competitive in really critical spaces. He probably said a million times, ‘It is never a good bet to bet against the American people.’

It wasn’t just subsidies. There were restrictions in terms of how much FEOC material would be allowed [for companies that wanted to claim a subsidy.] [FEOC refers to Foreign Entities of Concern — including Chinese companies.] What we were trying to do was to friend-shore supply. We ended up using a different set of tools to get at what the president was trying to achieve.

At that time particularly there was a lot of concern about inflation? There still is. Was that part of the decision too? [Section 301 is generally enforced by tariffs, which add to consumer costs.]

Sure. You were worried about inflation and the administration provided exclusions for certain industries. But again, if you thought the outcome from the 301 was going to be a series of financial incentives for our own and allied industries, other measures kind of got that done.

There is talk on the Hill and among Trump advisers about scrapping so-called permanent normal trading relations with China. Do you think that would be a good idea?

[The U.S. approved PNTR with China as part of the deal to support China’s entry into the World Trade Organization. PNTR eliminated the requirement of having an annual vote to continue assessing Chinese imports at the lowest possible tariff rate.]

These kinds of across-the-board mechanisms are very blunt instruments. They have a lot of implications for inflation, middle class consumers, and small businesses. I am a bigger fan of more targeted approaches.

I am very supportive of trying to do something very surgical and meaningful on chips. I am very supportive of trying to reorient the EV supply chain and the supply chains for critical minerals and the battery industry. 

There are strategic places where we should be very tough. But across-the-board? That doesn’t make sense to me. It’s hugely disruptive.

How useful do you think tariffs are as a tool?

I’m glad there’s a 25 percent tariff on Chinese EVs. That is reasonable, and I would go higher given the kinds of subsidization that you’ve seen in that industry from the Chinese. There are also a set of tools that are super relevant, including tougher use of CFIUS, outbound investment reviews, and export controls. [The Committee on Foreign Investment in the U.S. — CFIUS — reviews foreign investment in the U.S. for national security concerns.]

Tariffs can be a little bit simplistic in the sense that in a highly global economy, you can see how people can get around them so to be tough, you need to use all kinds of tools.

Talking about tariffs. Why is the China tariff review taking forever? Is it all political and we’ll see the results the day after the election?

[In May 2022, USTR began a review of the tariffs on Chinese goods imposed by the Trump administration. The review is required by law four years after tariffs are enacted, but the report has no mandatory deadline.]

The review touches so many industries and sectors that many different parts of the government have a stake in it. It is just hard to get everybody on the same page. There’s a lot of stakeholders in the conversation and a lot of variety of viewpoints.

Do you think we’ll see it before the election? 

The great thing about State of the Unions is that they tend to be forcing mechanisms. You can bet that if that forcing mechanism didn’t lead to a resolution that the probability of resolution goes down. So the fact that you didn’t hear about this [in the most recent State of the Union address] probably doesn’t make you want to bet on any particular time.

Let’s turn to the Indo-Pacific Economic Framework. There was a fair amount of criticism that this would not be a traditional trade agreement, and the U.S. wouldn’t make concessions on tariffs. How did you present it in the region and what was the response?

[IPEF is the Biden administration’s showcase economic effort to deal with trade, regulation and industrial policy in the Asia-Pacific.]

Initially there were some concerns raised. Some hoped that the administration would just hop back into CPTPP. 

[President Trump had pulled out of negotiations for an Asia-Pacific trade deal called the Trans-Pacific Partnership. Eleven countries continued negotiating, including Japan, Australia, Mexico and Vietnam, and signed a pact renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP. Many in Asia hoped the U.S would join the agreement or negotiate something like it. More recently China has said it wants to join CPTPP.]

Biden was quite clear in the campaign what his priorities were going to be and before we did anything like that, we would invest at home. That was the right call. But what was really interesting was that after IPEF got underway, those complaints kind of disappeared. It took a few rounds — and there were a lot of rounds — but the partners really started to see the value of the kind of engagement [the U.S. proposed] as they worked through issues. 

When you were negotiating with Asian countries, how did you think about it in relation to China? If you are Singapore, you don’t want to get caught between the U.S. and China. 

This wasn’t really about that. This was about a set of countries that make up a meaningful percentage of the global economy engaging and setting some standards and norms and growing closer economically. The one thing I’ve learned about trade is that sometimes resolving stuff that sounds very technical and boring can be quite an accomplishment. For a company that ships agricultural exports, if they then sit on someone’s dock because potentially they have a trace of biotech, this is a meaningful economic issue. You can reduce friction, bring people closer together and encourage investment.

The one thing I’ve learned about trade is that sometimes resolving stuff that sounds very technical and boring can be quite an accomplishment.

We viewed negotiating over rules of the road as an exercise in its own right to bring the United States and these partners closer together.

Did you see it also as a strategy of putting pressure on China?

I didn’t. We tried to keep it positive in its own right. As you noted, some of these countries aren’t looking to get caught in the middle of the somewhat more challenging aspects of relationships.

In the trade area, where do you think you made the most progress? 

Regulation. Agriculture. The negotiations brought in a number of countries like Fiji and Indonesia [which aren’t traditional U.S. trade policy partners]. People that don’t always do high-ambition kind of agreements were ready to roll up their sleeves and work on that.

Were labor standards the hardest part? 

First of all, we kept a very close dialogue with labor stakeholders throughout the process. USMCA had a set of labor standards and a rapid-response mechanism that people felt good about. There was a desire not to undermine that, or to take a step back from that. 

[The U.S.-Mexico-Canada Agreement negotiated in the Trump administration has enforceable provisions protecting labor rights and a ‘rapid-response mechanism’ to investigate denial of those rights in Mexico. USMCA was a follow-on dealt to the North American Free Trade Agreement.]

Were you pushing for something similar? 

We were trying to keep it very high-ambition. But we also all understood that because we weren’t giving some of the incentives [involved in traditional trade deals], that that would be a challenging component of the deal. 

[In free-trade negotiations, the U.S. usually offers concessions on tariffs in exchange for concessions from other countries in areas they find politically difficult.]

If you had offered tariff concessions or market access to the U.S. it might have made it easier.

Maybe. We were making good progress on the labor chapter. I just think these things take time. I don’t know that this means you need market access or whatever.

What were you ready to unveil in San Francisco?

[The U.S. was widely expected to announce a preliminary deal on the trade component of IPEF at a November 2023 leaders’ summit in San Francisco of the Asia-Pacific Economic forum, a grouping of 21 Pacific-rim economies. But no agreement was reached.]

We had made progress on a number of chapters — agriculture, regulatory, customs — a whole range of things. And it was just a question of how much did we need to close a chapter, given that Commerce’s chapters were going to close? There are complexities involved when you close a chapter and everyone has to go vote on it. I think it was just a packaging question. 

[In San Francisco, the U.S. announced it had reached non-binding deals negotiated by the Commerce Department on clean energy and anti-corruption measures. IPEF members also signed an earlier deal on supply chains.]

The reporting is that you didn’t announce a trade deal because Senator Sherrod Brown objected. [Sen. Brown, a strong voice for labor rights, is up for reelection in a tough race in Ohio.]

Was that the one thing? There was a lot of complexity going into it. There was a lot going on. There was a China meeting [between Presidents Xi and Biden]. There were other chapters closing. I think he [Sen. Brown] was of the view that you shouldn’t announce everything if you didn’t have a labor chapter done, and that was a reasonable perspective.

Let’s talk about digital trade. To an outsider, it seems simple. The U.S. believes in the free flow of data. It has been arguing over this with China forever because the U.S is worried about China requiring U.S. data to be stored there. Why has this become so controversial?

[In the fall of 2023, the U.S. suspended talks on digital issues in IPEF and dropped demands concerning international data flows at the World Trade Organization.]

The United States is trying to look at these issues and their impact on our ability to regulate in a more nuanced way. Because we just withdrew, that’s not how it came off. It’s not like we don’t care about China in that way anymore. It wasn’t that. It is a really complicated issue with a lot of strong feelings. I’m not sure that we were in a position to find language that everybody was comfortable with,

But it does look like there’s a change in philosophy. For years, the U.S. position has been no data localization, free flow of data across borders. But you’re saying we don’t want data going to China. 

There are a new set of weapons out there — economic, technological, resources—where you’ve got to be on your game.

I do think there’s a shift and I was a big advocate of the ‘connected car’ initiative. [In late February, the White House issued an executive order to investigate whether Chinese EVs are national security risks because they transmit data.] If you ask Tesla about the car they are selling in China today, it’s not the same Tesla that we’re driving here. It has a lot of data restrictions. 

As we get to autonomous driving and a car is looking in your eye to tell you to stop playing with your phone instead of driving, it is picking up lots of things and sending signals. It can also look at military bases. There are advances in data that make you have to think about technologies in a certain way. That will be ongoing.

Clearly the U.S. does not want a surge of Chinese EVs into America. The administration has kept the [27.5 percent] tariffs that the Trump White House had put on, which Lighthizer credits for stopping the Chinese import surge. But if you’re a Chinese company, you could, in theory, open a plant in the U.S. and start making cars. If this connected car proposal goes through, it could be a way of making sure that Chinese EVs do not become a competitor either as an import or if the company is located here or in Mexico which exports tariff-free to the U.S..

There’s certainly concern about what’s going on with Chinese EVs and about some of the non-market policies and practices that have enabled China to produce a car at heavily subsidized prices. I don’t think a 25 percent tariff is going to be the delta because the price differential is so great.

But there are real connectivity and security questions. These are cars that know what you’re doing. So I don’t think it’s crazy to look at this. They haven’t drawn any conclusions and the issues are complicated. It’s relevant to ask about some of the non-market policies, and practices that went on in China [to support development of its EV industry].

Let’s talk about Taiwan. You negotiated a trade deal with them. What did it do?

It did the same kinds of things we were talking about in the Indo-Pacific Economic Framework. The difference was you had one counterparty not 13 — a very willing and enthused counterparty that had a high labor environment. [The initial deal] had the same kinds of things — good regulatory practices, good customs and duties. The team is underway on the next set of things, including on the environment. And while we did some agriculture in the first round, now there’s more to be done. It’s a continuing effort. 

Should there be a full free-trade agreement with Taiwan? 

That’s really up to the Congress as to whether they want to support that effort. The way that these complex economies are evolving, things like market access and tariff reduction don’t seem to be driving the core. But it’d be interesting to think about.

Also obviously it would send a message to Beijing. 

For sure, and that is important. The administration is obviously on high alert on a lot of parts of that relationship.

During the first term of the Obama administration, they did hardly anything on trade. Second term, they went ahead with TPP and did a lot of other things on trade. Do you think a second Biden term would be like that because he wouldn’t be running for reelection? 

What Biden thinks about a lot is the art of the possible and art of the deal and what can happen and what you can get. That very nuanced feeling comes from his very long experience in the business ​​and because he cares deeply about how labor stakeholders think about these issues. I don’t think he’s like, ‘Election Day, boom we’re going to go.’ I think it would be a bit more of a continuation of what you’re seeing now, which is a really dedicated effort to see how some of the Bidenomic industrial policies he’s put in place evolve.

In every administration I have covered, there’s always a competition between Commerce and USTR. And in my experience USTR comes out on top because they’re the ones negotiating trade deals and Commerce doesn’t. But this time it seems like Commerce has come out on top. Why?

Commerce’s set of tools is becoming more relevant. First of all, they have a lot of money to deploy. Then they have export controls. But also Gina Raimondo is an absolute star. Any department that she is running is going to be center stage.

If Trump wins, how do you think things would change in this realm? 

I think Trump Two would be extremely different on trade than Biden. Extremely different. Trump’s been talking about tariffs since like 1999.

No, way before that.

It is just a thread through his career. He would probably overemphasize the tariffs as a tool and not look at some of these other complexities that made me realize their limitations. 

Coming out of the administration, how do you think about China? A competitor, threat, ally?

There are a new set of weapons out there — economic, technological, resources—where you’ve got to be on your game. A lot of people think they shouldn’t be allowed to flood the market despite their prices. There is economic complexity that’s very impactful. You’ve got to be on high alert.

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