Biden close to cutting Chinese tariffs to fight inflation

(Bloomberg) – President Joe Biden could announce as early as this week a rollback of some U.S. tariffs on Chinese consumer goods – as well as a new investigation into industrial subsidies that could lead to more rights in strategic areas like technology .

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Biden has yet to make a final decision, and the timing could slip, according to people familiar with the deliberations, who asked not to be identified without permission to discuss private conversations.

It would mark his first major political step on trade relations between the world’s two biggest economic powers. The president has held a number of meetings with senior economic advisers in recent weeks where options for a Trump-era tariff decision were discussed, according to the people.

Hints that the Biden administration is considering easing some of the tariffs on $300 billion of Chinese imports have mounted as inflation has picked up, pressuring U.S. officials to find ways to reduce the prices consumers pay for everyday goods.

Biden said last month he would speak to Chinese President Xi Jinping “soon” and told reporters he was “in the process” of deciding whether to lift the tariffs.

Some members of Biden’s cabinet suggested he use the upcoming call with Xi to ask him for reciprocal tariff cuts on U.S. products currently subject to import duties, though that idea was quickly dismissed, said the people.

A White House spokeswoman said no decision on tariffs has been made, but the administration wants to ensure they are aligned with ‘economic and strategic’ priorities and do not increase unnecessarily the costs to Americans.

The Wall Street Journal previously reported that a decision could be made as early as this week.

The Biden administration said in May it was taking the first step toward revising the tariffs, a process needed to prevent them from starting to expire in July. Industries that benefited from the duties imposed under former President Donald Trump have until July 6 to comment and request an extension of the levies.

US Treasury Secretary Janet Yellen said June 8 that the administration was seeking to “reconfigure” Trump-era tariffs, imposed on Chinese goods under what is known as Section 301 of the Commerce Act 1974, which “were not really designed to serve our strategy”. interests.”

Trump used Section 301 to hit China with tariffs starting in July 2018 after an investigation found China stole intellectual property from American companies and forced them to transfer technology.

Some existing tariffs have hurt American consumers and businesses, even though tariff policy is not a panacea against inflation, Yellen told lawmakers.

Commerce Secretary Gina Raimondo said last month that the administration had decided to keep tariffs on steel and aluminum but was considering removing them on other products.

“There are other products — household items, bicycles — that can make sense,” she said on June 5 on CNN’s “State of the Union.”

US Trade Representative Katherine Tai meanwhile made it clear that she was not convinced that any tariff changes would have an impact on price pressures. In a recent congressional hearing, she told lawmakers “when it comes to short-term challenges, there’s a limit to what we can do when it comes to, especially inflation.”

And Biden runs the risk of angering unions as he plans to lift some of the tariffs. Unions have opposed such a move, saying the levies help protect jobs in American factories. Biden has repeatedly pledged to be the most pro-union president in US history, and Democrats are counting on the support of working people in the key congressional midterm elections in November.

The White House asked retail companies to commit to lower prices after any tariff cuts, but executives rejected the request and told US officials it was an unrealistic expectation. people said.

The Biden administration has assessed a new investigation into Chinese subsidies and their damage to the US economy as a way to pressure Beijing on trade. This followed a phone call at the time between Biden and Xi in which Biden expressed frustration with China’s level of engagement with his team.

Read more: Biden team assesses China trade probe in bid to pressure Beijing

While China’s economy has been hampered by Covid-related shutdowns, Chinese exports to the United States in the first five months of 2022 in dollars rose 15.1% on the year while imports grew. increased by 4%, according to official data.

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