Top US trade official says the Russian invasion of Ukraine has been 'a driver of inflation,' while many COVID-related supply-chain disruptions 'have been ironed out'

• Ambassador Sarah Bianchi said many COVID-related supply-chain disruptions "have been ironed out."
• "A lot of what today's actions are, is to prepare for the future," she said during an interview with Insider.

The earliest days of the COVID-19 pandemic presented an unprecedented challenge for countries around the globe, as world leaders were faced with managing a deadly virus while also keeping economies afloat amid masses of people retreating indoors due to lockdowns and business closures that shuttered entire industries.

With the severity of the pandemic came major supply-chain disruptions, which, in 2020, impacted everything from cleaning supplies to toilet paper, and remained a salient issue when President Joe Biden took office in January 2021.

In June 2021, Biden launched the Supply Chain Task Force, a key part of the administration's effort to strengthen the supply chain and boost American manufacturing, with the Office of the United States Trade Representative working with economic partners to focus on resiliency for critical products, including advanced batteries and semiconductors.

But in February 2022, Russia launched an invasion of Ukraine, creating diplomatic tumult when inflation and gas prices had already become a major concern in the US and many countries around the world.

Sarah Bianchi, the deputy United States trade representative, told Insider that the war has impacted the supply chain by propelling inflation, while also pointing to Biden's efforts in seeking to tackle the issue.

"It's certainly a driver of inflation. With regard to high gas prices and energy prices, that has definitely contributed to higher gas prices," Bianchi said of the conflict.

"And that's why the president wrote to the leading oil refineries, encouraging them to put more capacity, more output in the near term, and trying to help with that supply chain challenge in particular — and encouraging them not to keep extra refinery profit margins well above normal, but to pass that on," she added.

Below are excerpts from a conversation with Bianchi:

What were some of the first steps that the administration took in tackling some of the bigger supply-chain issues?

The very first issues had to do with things specifically related to the pandemic — trying to get things done with pharmaceuticals and medical supplies and other things. That was really step one. USTR is part of that effort. One of the things we've done is improve relationships with other countries around pharmaceutical approvals and inspections so that we can streamline it, so that things like medical equipment don't get bogged down in unnecessary issues.

What were some of the things that the American Rescue Plan did to tackle supply chain issues?

The administration has done a lot of things to address the supply chain. In fact, the president just signed the Ocean Reform Act, which addressed late fees charged by carriers and terminals seeing astronomical profits. I think some of the things in the Rescue Plan specifically, were helping state and local governments stay solvent so they could provide services, helping Americans buy food and making that easier, helping consumer demand, and then a lot of help to small businesses through loans to try to keep the supply chain going. And then the vaccines were really instrumental in terms of getting the economy back, with people participating and working in-store, which helps with the supply chain crunch as well.

How has the administration tackled the computer chip shortages that have been prevalent since the start of the pandemic?

The president is fighting for legislation on the Hill that would really diversify where chips are supplied from. I think we've done a lot of partnering with other countries to try to make the supply chain more resilient.

David Adelman, the former ambassador to Singapore, recently said on CNBC's "Squawk Box" that cutting tariffs on imported Chinese goods might take 1 percent off inflation in the United States. Treasury Secretary Janet Yellen last month said that some tariffs on Chinese imports serve "no strategic purpose." Is the administration still mulling over any changes?

What the president has asked us to do is to take an overall look at the tariff structure to make sure we have a more strategic approach with China. So really, we're addressing some of the real concerns we have with the Chinese, such as their non-market practices and economic coercion, and then looking at where things might not be as strategic and reconsidering tariffs in that regard. That is a process that's ongoing for the president's direction and we intend to complete it in the near future.

What are some big misconceptions that people have about supply-chain issues in the United States?

A lot of things are working well today. A lot of the disruptions from the pandemic have been ironed out and we're seeking to make more progress. And a lot of what today's actions are, is to prepare for the future. Under the USMCA, we put in place a mechanism for Mexico, Canada, and the United States to coordinate early in the event of an emergency and make sure we don't have disruptions to the flow of trade in the future.

Are there any sort of new trade initiatives that would be enacted with Taiwan?

We've always had ongoing talks with Taiwan. We have a TIFA [Trade and Investment Framework Agreement] with them. We recently launched the US-Taiwan Initiative on 21st Century Trade to try and address a number of issues that impact supply chain resiliency, including trade facilitation, good regulatory practices, and digital trade.

What would you say are maybe one or two big long-term trade strategies that the administration will like to see implemented over the next four years?

The initiative with Taiwan is really important. And then the other thing that we are really focused on right now is what we call our Indo-Pacific Economic Framework for Prosperity. And that is designed to really strengthen our economic engagement in the Indo-Pacific region. Thirteen countries have joined. Under the trade pillar, we will address everything from digital trade to labor, environment, agriculture, and a whole range of things.