U.S. President Joe Biden could announce that the American government is reversing some tariffs on Chinese consumer goods.
Biden has not yet made a final decision. A rollback would be President Biden’s first major policy step on trade ties between the world’s two biggest economic powers. The president has held numerous meetings with senior economic advisers where options for a decision on the tariffs were discussed.
As inflation accelerates, there is increasing pressure to reduce consumer product prices. There have been indicators that the Biden administration is considering relief on some of the tariffs, which have impacted $300 billion in Chinese imports.
In May, the Biden administration announced the beginning of a long process towards reviewing and potentially rolling back the tariffs. Without beginning that process, the tariffs would have expired automatically. The deadline to /request extensions of tariffs against China passed on Wednesday, July 6th.
In June, Biden stated that he will talk to Chinese President Xi Jinping soon and that he was in the process of deciding to lift the tariffs or not.
In a June 8th announcement, U.S. Treasury Secretary Janey Yellen claimed the Biden Administration would “reconfigure” tariffs on Chinese goods, citing Section 301 of the Trade Act of 1974. Yellen also reiterated that the U.S. would speak to Chinese President Xi Jinping on the matter and acknowledged the tariffs “really weren’t designed to serve our strategic interests.”
Beginning in July of 2018, President Trump took advantage of Section 301 to impose the tariffs on China as a result of “stolen intellectual property.” Reversing tariffs, Yellen believes, could help ease inflation.
A White House spokeswoman advised that no decision on the tariffs has been made, but the administration wants to make sure they are aligned with the “economic and strategic” priorities and don’t unnecessarily raise costs for America.
Commerce Secretary Gina Raimondo stated last month that the administration decided to keep tariffs on steel and aluminum but was considering dropping them on other goods. “There are other products — household goods, bicycles — it may make sense,” Raimondo said on June 5.
U.S. Trade Representative Katherine Tai, who takes a different perspective, has made it clear she’s not convinced that any tariff changes would have an impact on price pressures. She recently told lawmakers, “with respect to short term challenges, there’s a limit to what we can do with respect to, especially inflation.”
From this perspective, Biden is running the risk of disturbing unions as he contemplates on lifting some of the tariffs. Many unions have strongly opposed Biden’s line of thinking, claiming the current state of affairs protects US factory jobs. While Biden alleged to be the most pro-union President in US history, Democrats are counting on labor support in upcoming midterm elections which makes this a high pleasure situation.
In addition to these potential policy changes, the Biden administration has been weighing a new investigation into Chinese subsidies and their damage to the U.S. economy a way to pressure Beijing on trade. Biden has expressed US frustration over Chinese engagement in this realm.
While China’s economyhas been affected due to Covid-related shutdowns, Chinese exports to the US in the first five months of 2022 grew 15.1% on the year while imports rose 4%, according to official data.
