Amid soaring inflation, US trade groups and economists call for removal of Chinese tariffs

0

* Several White House officials, as well as President Joe Biden himself, have signaled that the administration is considering whether to dismantle at least some of former President Donald Trump’s tariffs on Chinese goods.

* As Americans continue to feel the sting of soaring inflation, economists have said eliminating or at least reducing additional tariffs on Chinese goods would help curb high inflation and stabilize inflation expectations.

* Even Yellen said in a Bloomberg Television interview that removing Trump-era Chinese tariffs would have “desirable” effects on inflation and “worth considering.”

WASHINGTON, May 12 (Xinhua) — As inflation nears a 40-year high, U.S. trade groups and economists have urged the Biden administration to scrap additional Trump-era tariffs on Chinese imports , considering these tariffs as counterproductive for the American economy .

These tariffs, with no valid policy purpose, were an unnecessary tax on American consumers and businesses, they said, noting that eliminating them or at least reducing them would help reduce high inflation and stabilize inflation expectations.

But as the midterm elections approach, some lawmakers, eager to take a tough stance on China, may be reluctant to support China’s easing of tariffs, refraining from doing the “right thing” for China. American businesses and people.

HIGH INFLATION, HIGH PRESSURE

Several White House officials, as well as President Joe Biden himself, have signaled that the administration is considering dismantling at least some of former President Donald Trump’s tariffs on Chinese goods.

“We’re discussing that right now. We’re looking at what would have the most positive impact,” Biden told reporters after a speech on inflation on Tuesday, noting that no decision has been made.

Biden’s remarks follow recent statements by Deputy National Security Adviser Daleep Singh and Treasury Secretary Janet Yellen, who spoke of a possible easing of tariffs on Chinese goods in late April.

Republican Senator Mike Crapo also called for a “thoughtful application” of Section 301 tariffs on China. “We need to reduce tariffs on inputs that support American manufacturing, or on goods consumed by the American consumer, especially middle- and low-income families,” he told a Senate committee hearing. finances.

Such voices have come as the United States is experiencing the highest inflation in four decades, with the consumer price index (CPI) remaining above 6% year-on-year since October last year. According to Labor Department data released on Wednesday, the CPI in April jumped 8.3% from a year ago, marking the second consecutive month of inflation above 8%.

Although price growth showed signs of slowing in April, the latest CPI data “provided a stark reminder” that the Federal Reserve has a long way to go to bring down inflation,” said Sarah House and Michael Pugliese, economists at Wells Fargo Securities, said in an analysis.

“Americans are unhappy with rising inflation and rising costs, so delivering tariff relief soon is a way to lower prices and increase demand, especially for consumer goods,” the US said. -China Business Council (USCBC), which represents 260 American companies that do business with China, told Xinhua on Wednesday.

The trade group earlier said there was ‘no reason’ to keep the extra tariffs on Chinese goods imposed during Trump’s presidency as they were an ‘unnecessary tax’ on consumers and businesses Americans “without valid political objective”.

Americans for Free Trade, a broad coalition of trade organizations, recently warned that Section 301 tariffs were creating an “additional economic burden” on American businesses, manufacturers, farmers and families, making the United States less globally competitive and were causing “disproportionate economic harm to a U.S. economy struggling with lingering inflation concerns.”

In addition to hurting American businesses and workers, tariffs are also driving up prices and inflation expectations are starting to rise, according to an Axios report titled “Trump’s China Trade War Was a Failure.” in every possible way”.

LOWER RATES, LOWER PRICE

As Americans continue to feel the effects of soaring inflation, economists have said eliminating or at least reducing additional tariffs on Chinese goods would help curb high inflation and stabilize economies. inflation expectations.

In a recent study, Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics (PIIE), and his colleagues Megan Hogan and Yilin Wang argued that the direct effect of eliminating additional tariffs on products China would be a 0.3 percentage point reduction in the CPI, but there would also be an indirect effect, which would “substantially” add to the 0.3 percentage point.

“That would be a pretty strong signal to U.S. businesses that they’re going to face more competition and it could lead them to moderate their price increases as inflation picks up,” said Hufbauer, also a former Treasury official. American.

Reacting to the argument that cutting China’s tariffs won’t lead to a significant reduction in prices, Hufbauer said it doesn’t completely eliminate the inflation problem, “but it’s better than nothing. To do”.

“So there’s an increase in interest rates, a reduction in federal spending, a reduction in tariffs, all of these things have an impact,” he said. In the context of an economy on fire, “every little gesture counts”.

The PIIE study found that “a doable trade liberalization program” could lead to a one-time reduction in CPI inflation of around 1.3 percentage points. This would save $797 for every American household.

In the opinion of former US Treasury Secretary Lawrence Summers, this reduction in inflation through the removal of tariffs is “greater” than anything that can be achieved in the next two to three years through to antitrust action, and it’s probably much “bigger” than the price-fixing of meat packaging, which has been the subject of several presidential events.

Even Yellen said in a Bloomberg Television interview that removing Trump-era Chinese tariffs would have “desirable” effects on inflation and “worth considering.”

RIGHT WING OR GOOD THING?

Despite encouraging signals about lower tariffs, some lawmakers, who are vying for an advantage in November’s midterm elections, may be reluctant to ease China’s tariffs, observers say.

“The midterm elections are highly unlikely to result in an easing of various tensions between the United States and China, including the tariff legislation,” Greg Cusack, a former member of the House of Representatives, told Xinhua. from Iowa.

“The Republican nominees are even more right-wing and extreme than current members of Congress, and Democratic candidates across the board will fight an uphill battle in which they cannot afford to be seen as ‘weak’ or like in any way ‘give in to China,'” Cusack, a longtime Democrat, said.

“Congress doesn’t have much incentive to do the ‘right thing’ unless it’s likely to boost their poll rankings or bring in more campaign funds,” he noted. .

Senator Josh Hawley of Missouri, who according to the Washington Post is “trying to take on the mantle of right-wing populism”, recently tweeted that now is “no time to be soft on China”.

“Enriching China and waking up multinational corporations on the backs of working Americans is a failed policy favored by the globalists. Put working Americans first,” the rising Republican Party star said.

Leaving their comment below, one Twitter user said, “It literally causes inflation. You complain about inflation. And you complain when they try to reduce inflation. Just say you don’t have no value system. You mean no.”

“We must put on what is best for our country, not for a political party. Stop playing games,” another user wrote.

It’s not just Republicans who want to play the China card. Democratic Congressman Tim Ryan of Ohio said lifting tariffs on “non-strategic” products from China would be a major mistake, blaming China for the economic hardship of American workers.

In the current political environment, Hufbauer said the Biden administration may be reluctant to scrap Trump-era tariffs because it faces criticism for being “soft” on China.

“They’re worried about it, and it’s preventing them from doing the right thing, the right thing for the American economy,” Hufbauer said.

The trade expert said the House of Representatives and Senate may be able to reach an agreement on the America COMPETES Act, which could include billions of dollars in funding for the semiconductor industry and an exclusion extended tariff for Chinese products.

There’s a greater than 50% chance that lawmakers could iron out the disagreement by the summer and come up with a series of individually small, but collectively meaningful tariff exclusions, Hufbauer said.

Chen Fengying, a researcher with the China Institutes of Contemporary International Relations, told Xinhua that since 2018, the trade war has escalated step by step, causing harm to both sides.

Noting that the trade war in the context of globalization will only exacerbate inflation in the United States, the scholar said that the cancellation of the relevant tariffs is conducive to alleviating US economic problems.


Source link

Share.

About Author

Comments are closed.