Biden looks at Tariffs on Chinese Imports

Image by Alexandros Michailidis / Shutterstock.com
Image by Alexandros Michailidis / Shutterstock.com

Gina Raimondo, a spokesman for the Commerce Department, confirms that President Biden doesn’t know whether he’ll ease tariffs on Chinese imports as he weighs inflation against the employment impact.

According to Raimondo, he is balancing the impact of tariff reductions on inflation with the potential harm they may cause to U.S. workers. The matter is extremely important to him, she stated. Ms. Raimondo and Treasury Secretary Janet Yellen are among cabinet members who think a limited tariff cut would benefit U.S. businesses and consumers.

Raimondo said that the answer depends on how and what products are used, but it seems to have some merit. It is up to the president to make that decision, and he has been briefed several times.

Labor groups argue that the tariffs have protected domestic manufacturers and encouraged them to invest at home. U.S.  Representative Katherine Tai said the tariffs are a powerful tool for confronting China about its failure to comply with a bilateral trade agreement signed under the Trump administration that was supposed to lower the U.S. trade deficit. In tight midterm elections, Democrats feel vulnerable to Republican accusations that they are weak on China and have urged the White House to resist pressure to ease some tariffs.

Moreover, economists and administration officials believe a tariff cut would only have a limited one-time effect on prices.

Also complicating the discussions have been China’s elevated tensions over Taiwan following House Speaker Nancy Pelosi’s and other lawmakers’ visits to the self-ruled island this summer. China’s war games around Taiwan have led Biden administration officials to recalibrate their thinking on whether to scrap some tariffs or potentially impose others on Beijing,

Due to team divisions and his own caution, Mr. Biden has put off a decision for months, while other issues, such as the war in Ukraine and the recently passed Inflation Reduction Act, have taken precedence.

A source familiar with the situation says he is regularly briefed on the pros and cons. The president has been presented with a package that includes options to reduce consumer product tariffs and allow importers to request exemptions.

Under Section 301 of the Trade Act, another proposed action would be to launch a new investigation into Chinese subsidies and state-owned enterprises to protect its strategic industries, including information technology, electric vehicles, biotechnology, and aerospace, which may result in new tariffs.

A tariff cut was expected as early as July, targeting back-to-school items like bicycles, clothing, and other consumer goods not strategically crucial to U.S.-China economic competition. Between July 2018 and September 2019, former President Donald Trump imposed tariffs ranging from 7.5% to 25% on Chinese imports worth roughly $370 billion.

Due to the tariffs, Chinese imports are more expensive for U.S. companies, and consumers pay more for products. Inflation control is an important goal for Biden, a Democrat, ahead of the November midterm elections, in which Republicans may gain control of one or both houses of Congress.

U.S. and Chinese trade deals were signed in 2020, but the U.S. kept most levies on Chinese imports to ensure compliance with the accord’s provisions, including promises to increase U.S. purchases.

During the Trump administration, more than 2,200 import categories were exempted from tariffs, including many critical industrial components and chemicals, but those exclusions have expired since Biden took office in January 2021. U.S. Trade Representative Katherine Tai has only reinstated 352 of them. Over 140 U.S. lawmakers and industry groups have urged her to increase the number dramatically.