By Reshma Kapadia
After a year of tariffs, trade deals and geopolitical conflicts, former U.S. Trade Representative Katherine Tai sees the need for an "out of the box" trade approach.
Specifically, she says world leaders should be increasing the number of winners in trade deals as they grapple with the U.S.-China rivalry, geopolitical fragmentation and artificial intelligence.
As trade representative, Tai sought to build coalitions with allies and kept a close eye on labor protections as she enforced and implemented trade pacts, including the U.S.-Mexico-Canada Agreement (USMCA) signed during the first Trump term.
Barron's spoke with Tai, now the executive director of the Coalition for New Trade and a resident fellow at the Institute of Politics at Harvard Kennedy School, about tariff refunds, the coming summit between President Donald Trump and Chinese leader Xi Jinping, the renewal of USMCA and how trade policy needs to change.
Barron's: Where do you see tariff levels settling after many of last year's global tariffs were struck down by the Supreme Court?
Tai: There's a quality of this administration that reminds me a bit of the genre of jazz music. You start with a theme: Tariffs. Then things happen and it feels like there is a lot of improvisation and performance.
But it's real. People should be expecting more tariffs than were in place Jan. 20, 2025. For as long as Donald Trump is president, there will be an active tariff agenda.
The administration in March unveiled two new investigations under Section 301 of the Trade Act of 1974, one around excess capacity with 16 targets and the other around forced labor with 60 targets, to rebuild some of these tariffs. How feasible are these and what do you think of this approach?
I'm going to guess there has been a lot of pre-work that has gone into all of it. It's doable -- and it's credible. They are aiming at problems that have had longstanding bipartisan support.
But it's coming a year into the administration, after all the drama and failure to defend the IEEPA justification at the Supreme Court. One of the problems of putting these out now is that it makes it feel like tariffs seeking justifications, not justifications employing tariffs.
Does that open them up to legal challenges? Most certainly they will be [challenged], but the main problem with the IEEPA rollout was that it wasn't credible.
What do you expect in terms of tariff refunds?
It's good we are still in a rule of law situation and Customs and Border Protection is taking steps to comply with this. They do refunds but not on this level or scale so I don't think they know [how it will be done], but there is evidence of them trying.
But you can't undo everything that has happened in the last year. That is one of the lessons of the Trump administration: There are going to be few remedies that make anybody whole.
What are your expectations for the Xi-Trump summit and US-China relations?
It has been hard to read the president and this administration's approach. Just like tariffs are being done for tariffs' sake and then people with technical expertise and a view about the working of the global economy are trying to make sense of it within that directive, the challenge for this summit is that the directive is that there needs to be a show and it needs to make the markets feel good.
As the July 1 deadline to renew the USMCA approaches, why is it important to keep the pact rather than turn to bilateral agreements?
Supply chains. Bilateral deals would be much more complex to administer and comply with -- and it gets into the integration of American supply chains. It becomes messy. Just think about all the questions for Customs and Border Protection to figure out about tariff refunds.
There's another interesting dynamic: If you look at what is coming out of USTR around the review, I'd focus on the part about the three countries coming together to look at structural changes needed in their economies.
Supply chains and rules of origin -- in autos and non-autos -- are very much at the top of [Greer's] mind. Another is for the three countries to get on the same page around their approach to foreign investment into North America. Let's hold that in our minds until we see what comes out of the Xi-Trump summit. The trade deals that have come from this administration all involve some sort of investment package.
Those two things [USMCA and such a deal] I potentially see coming into significant conflict. In USMCA, there's a provision that should any of the partners enter into a trade agreement with a nonmarket economy, they must inform the other -- with the unspoken implication that would be a cause to rethink the whole thing.
How do you think the trade gameboard should be reset against a backdrop of the rivalry with China, AI and increasing geopolitical fragmentation?
If you are inviting the scrambling of who is a winner and who is a loser, are you trying to scramble it to make more people and economic actors better off or re-scrambling it so that those are well-off become even better off? We need to completely think outside of the box.
'In the box' thinking gave us the kind of interdependence that's causing a lot of our problems, especially on supply chains. Countries continue to sign those old-style free trade agreements, which embed supply chokepoints and have digital rules written by the companies already dominating AI.
Out-of-the-box thinking recognizes that you might sign an agreement with one country on critical minerals and with a different country on shipbuilding, and the substance of those agreements might not look anything alike. You also shouldn't be signing any trade rules that affect AI until we have a sense of how we're going to regulate it. This is a time of experimentation -- there is no 'one size fits all.'
Write to Reshma Kapadia at reshma.kapadia@barrons.com
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April 12, 2026 01:00 ET (05:00 GMT)
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