Biden Considers Rolling Back Some Trump-Era China Tariffs

US President Joe Biden may announce this week the removal of some of the tariffs that former President Donald Trump imposed on China at the start of a trade war in 2018.

The move would allow the administration to claim that it is acting to reduce the effects of inflation on American consumers, even though the impact may be quite small.

Reports of the Wall Street Journal Y Bloomberg over the weekend they suggested that the government is still debating the issue internally. The expectation is that tariffs on some goods not related to national security will be lifted immediately, and that the administration will restart a process that allows companies to request “exclusions” for certain goods.

On Monday, the digital portal Political reported that the administration is considering lifting roughly $10 billion worth of tariffs immediately. If so, that would represent a very small fraction of the $370 billion in tariffs imposed on Chinese goods during the Trump Administration.

a long process

The Biden Administration has been under pressure from the business community to address the tariffs, which effectively function as a tax on American consumers, since the Democrat assumed the presidency in early 2021.

In a series of public statements dating back to September of last year, the administration has indicated its willingness to at least consider revising the tariffs, but advocates have so far waited in vain for a concrete proposal.

In her testimony before Congress last month, Treasury Secretary Janet Yellen said that “this administration inherited a set of tariffs imposed by the Trump Administration that I believe were not really designed to serve our strategic interests.”

“We’re taking a look at that and looking to reconfigure those rates in a way that’s more strategic,” Yellen added.

According to a Treasury Department statement, Yellen and Chinese Vice Premier Liu He discussed the tariff issue during a video conference on Tuesday.

Secretary of State Antony Blinken is expected to meet Chinese Foreign Minister Wang Yi on Saturday during a trip to Asia, and sanctions may also be on the agenda there. Biden and Chinese President Xi Jinping will speak later this month.

potential impact

In an analysis published in March, the Peterson Institute for International Economics studied the impact of the total elimination of the tariffs imposed by the Trump Administration during the trade war. It concluded that the country would experience a one-time drop in inflation of about 1.3%.

“While a 1.3 percentage point cut may seem small when inflation exceeds 7%, the relief is not trivial,” the report found. The annual savings for the average American household, he said, would be $797 per year.

However, experts said there is no reason to expect that removing tariffs on just $10 billion of Chinese goods will significantly control inflation.

“Will it have a big impact? I think the answer is no, not in the short term,” she told the voice of america William Reinsch, chair of the international business school at the Center for Strategic and International Studies. “If they come up with tax breaks in the $10 billion range, which is the rumor, that’s not much.”

“No matter what I do, both sides will be unhappy,” Reinsch said. “The companies will say that it is too little and the workers will say that it is too much. However, if it’s only $10 billion, I think the companies probably have the best argument.”

Added Lincicome: “It seems like what’s really going on here is that this is an attempt to get rid of critics of the administration, while not really doing much with the rates themselves. Because, again, $10 billion of $300 billion is really not going to move the needle.”

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