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Biden Planning Modest Relaxation of China Tariffs as Inflation Pressure Grows

According to reports, the administration could unveil exclusions on $10 billion of the Chinese goods subject to tariffs under Trump
A native of New York, Alina has a Bachelors degree in Corporate Communications from Baruch College and writes about human rights' related issues, politics, tech and society.
Published: July 6, 2022
This photo taken on August 7, 2018 shows workers unloading bags of chemicals at a port in Zhangjiagang, located in China's eastern Jiangsu Province. (Image: JOHANNES EISELE/AFP via Getty Images)

U.S. President Joe Biden’s administration has further hinted at the easing of tariffs on Chinese goods following a milestone meeting between top economic officers from the U.S. and China. 

Politico reported on July 5 that according to three industry officials and former federal officials with knowledge of administration plans, Biden will likely first lift a narrow set of tariffs on select Chinese imports, before reassessing and easing more restrictions over time. 

The initial step could see tariffs lifted on Chinese goods worth around $10 billion, and be backed up by a “new exclusion process for firms to win additional relief,” according to the Politico piece. 

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On July 4, the Dow Jones predicted that the Biden administration could announce as early as next week whether the tariffs will be rolled back, and if these will be done over a transitional period, or take effect immediately. 

On July 5, People’s Republic of China (PRC) Vice Premier Liu He and U.S. Treasury Secretary Janet Yellen had a virtual meeting to discuss issues related to “macroeconomic and financial developments in the United States and China,” as well as the “global economic outlook amid rising commodity prices and food security challenges,” according to a readout from the U.S. Department of Treasury. 

The virtual event marked the first official talk held between Chinese and U.S. officials since October, and will now be handed over to the Biden administration to make the final call in deciding whether to fully, or partially, lift the tariffs. 

Communist China’s state mouthpiece Xinhua expressed a positive attitude about the talks, calling the meeting “constructive” and a “pragmatic and candid exchange of views.” It stressed the importance of lifting “additional tariffs on China and sanctions by the U.S. side, and fair treatment of Chinese enterprises.”

Tariffs imposed by the Trump administration covered about $730 billion worth of goods from the PRC, beginning in summer 2018 amid the former president’s toughening stance on Beijing — including its intellectual property theft and economic espionage against American industries and private enterprises. 

A Section 232 investigation also discovered that foreign products posed a threat to Washington’s national security, and resulted in a 25 percent tariff increase on steel, and an additional 10 percent levy slapped on imported aluminum. 

Beijing then responded with its own taxes on American imports, imposing a 25-percent hike on U.S. aluminum, soybeans as well as certain car and airplane parts. 

What comes next?

The Office of the U.S. Trade Representative (USTR) announced on May 3 that it would begin a statutory review of China tariffs ahead of their expiration in July. The review is part of a legal requirement to go over tariffs every four years, and puts the burden on U.S. businesses benefiting from those tariffs to communicate whether they want the policy to continue. The requests would then trigger a comprehensive review from the trade office, and would include an extended period for the public to provide comments.

The USTR’s official tally shows it received 400 requests from American corporations urging the government to continue the tariffs on Chinese imports. 

USTR chief Katherine Tai also appeared to echo these sentiments, telling Reuters on June 22 that she believed the tariffs were a “significant piece of leverage” to help “improve the competitive position of the US economy in the medium and long term.”

“The China tariffs are, in my view, a significant piece of leverage – and a trade negotiator never walks away from leverage,” Tai said, adding that “this leverage is a strategic program that will strengthen American competitiveness and defend our interests in a global economy in which China will continue to play.”

Former President Donald Trump on July 5 criticized the calls to remove tariffs, saying it would be “a terrible mistake,” while earlier in June, the United Steelworkers (USW) wrote to Biden urging him not to soften the United State’s stance on Beijing: 

“Too many U.S. companies have failed to take needed actions to address the threat posed by Chinese Communist Party policies. Many … have failed to respond to the signals clearly and continuously sent by the CCP that it is not interested in competing, but in winning and dominating key industries,” the union said.

“Our government must act in the national interest to strengthen our economy for the future.”

Biden under pressure to address inflation

And although politicians have remained largely divided over whether to lift China tariffs to help keep consumer costs low, a poll conducted by the Morning Consult on behalf of the Coalition for a Prosperous America on April 22 found that an overwhelming 71 percent of registered U.S. voters support the continuation of tariffs. 

The USTR review also comes ahead of midterm congressional elections in November, with inflation likely to be a major issue. Some U.S. policymakers have therefore called for a reduction of duties in order to provide relief to consumers facing rising prices, and enable American manufacturers to have a chance at competing. 

“There are a lot of different elements to this,” White House Press Secretary Karine Jean-Pierre said during a June 25 briefing. “So we want to make sure that we have the right approach. And again, [Biden’s] team is talking, is figuring it out, and they’re talking through this.”

According to a newsletter by Politico, as of June 8, the U.S government had collected more than $140 billion worth of duties on Chinese goods as a result of the tariffs — raising costs for U.S. businesses and consumers.

Yellen has also maintained her call for the cancellation of at least some China tariffs in recent months — especially as domestic inflation rose to the highest level in four decades — reaching a high of 8.6 percent in May.