Biden Administration 'Considering' Reducing China Tariffs to Ease Inflation
Despite promises to review and revisit them when he took office, President Biden has so far left the Trump administration's China tariffs mostly intact. But with inflation still running wild, that could soon change.
Reuters reported that U.S. Treasury Secretary Janet Yellen is urging the Biden administration to consider reducing or eliminating some tariffs on Chinese goods as a means of mitigating rising prices for consumer goods.
"Some of them, to me, seem as though they impose more harm on consumers and businesses and aren't very strategic in the sense of addressing real issues we have with China," said Yellen, according to Reuters.
The "real issues" Yellen is referring to are China's alleged misappropriation of U.S. technology and intellectual property. The Trump administration originally implemented the tariffs to crack down on these issues, but in doing so included the majority of the goods the U.S. imports from China, related or not. Those tariffs have remained in place even as they've faded from the spotlight during the pandemic and the resulting supply chain meltdown.
According to the Peterson Institute for International Economics, average tariffs on Chinese goods stand at 19.3%, more than six times higher than they were prior to the start of the trade war in 2018. The tariffs cover more than two thirds of the goods the U.S. imports from China, including virtually every kind of promotional product.
Reducing or eliminating these tariffs would, in theory, provide some relief to U.S. businesses and consumers. And the idea is gaining steam with economists and business groups, Reuters reported.
Still, the matter is the subject of "heated debate" within the Biden administration. According to Reuters, U.S. Trade Representative Katherine Tai wants to keep the tariffs in place as part of a longer-term, "strategic" China trade agenda that may call for additional tariffs.
— Reuters (@Reuters) May 17, 2022
Even if the U.S. were to roll back any tariffs, the impact may be minimal. Yellen said in December that tariff reductions would not necessarily be a "game changer." And while the Peterson Institute said reductions could cut inflation by up to 1.3%, or $797 per U.S. household, Tai has adamantly disagreed, calling those findings "something between fiction or an interesting academic exercise," per Reuters.
Either way, it seems that the debate is at least forcing the Biden administration to reevaluate its trade policy with China and address tariffs in one way or the other.
"I am considering it," President Biden said, according to Reuters. "We did not impose any of those tariffs. They were imposed by the last administration and they're under consideration."