May 23, 2022 at 1:15 am
image source,Getty Images
U.S. President Joe Biden said on May 10 that he and his team are discussing whether to cut tariffs on China to combat the inflationary problem ravaging the United States.
Following the US Trade Representative Dai Qi, Biden’s remarks once again set off a heated discussion in China on the other side of the ocean. There is a view that the four-year trade war may end here, and the Chinese official also issued a statement claiming that “it is good for the United States and good for China. good for the world.”
The discussion is even more intense in the United States. On the one hand, within the government, the views of U.S. Treasury Secretary Yellen and Trade Representative Dai Qi are tit-for-tat; on the other hand, large U.S. retailers are complaining about high tariffs, but most people support the opposition. Chinese punitive tariffs.
Meanwhile, the Biden administration will face a test in the midterm elections in November. Is high inflation hitting the approval rating harder, or softening the stance on China hits the approval rating harder? This is the current dilemma facing Biden, and it may also affect the future direction of the protracted trade war between China and the United States.
Supporters: Abolish tariffs to fight inflation
This month, the Biden administration notified about 600 U.S. industry representatives who benefited from the tariffs on China, which will begin to expire in July, though any request to continue the tariffs would trigger a review by the U.S. Trade Representative of the tariffs, which are under review. During this period, the tariffs are still in effect.
According to a Archyde.com report, within the administration, the main supporters of the repeal of tariffs on China are Treasury Secretary Yellen and Commerce Secretary Raimondo, who are in favor of abolishing tariffs to fight inflation.
The opponents are mainly US Trade Representative Dai Qi, who are unwilling to give up the important bargaining chip of the United States against China, and hope to continue to use tariffs to reshape China’s economic behavior.
On May 18, U.S. Treasury Secretary Yellen confirmed in a public speech that she was calling on Biden to lift some tariffs on China, because some tariffs are “less strategic” and hurt American consumers and businesses.
Yellen said internal discussions are ongoing. “Some of these measures seem to me to be doing more harm to consumers and businesses and are not strategic in addressing our real problems with China,” she said.
image source,Archyde.com
U.S. Treasury Secretary Janet Yellen, 76, is an economist who previously chaired the Federal Reserve and chaired the White House Council of Economic Advisers under former President Bill Clinton. She is credited with helping the U.S. recover from the 2007 financial crisis and subsequent recession.
The Trump administration initially investigated Chinese goods under Section 301, mainly for China’s misappropriation of American technology and intellectual property, but as the trade war escalated, nearly all Chinese goods exported to the United States, from bicycles to clothing, were included.
A group of U.S. officials and economists, including Yellen, argue that supply chain disruptions from the coronavirus pandemic and Russia’s invasion of Ukraine have sent food and energy prices soaring, making inflation increasingly unbearable.
“Tariff cuts could help ease inflation,” Yellen said, with benefits for consumers and businesses.
The National Retail Federation (NRF) also sided with supporters. Members of the association, which includes major retailers such as Walmart, sent a letter to Biden on May 18 calling for the reduction or removal of tariffs on Chinese goods.
The National Retailers Association claimed that removing tariffs on China initiated by the Trump administration could reduce the price index by as much as 1.3%. U.S. prices rose 8.3 percent from April last year to April, with prices for gasoline, food, cars and other products soaring, Labor Department data showed.
The National Retailers Association also said in the letter that U.S. importers have paid $136.5 billion in tariffs stemming from the U.S.-China trade war, with those costs largely passed on to U.S. consumers.
image source,Archyde.com
US Trade Representative Dai Qi, whose parents are immigrants from Taiwan, worked and lived in mainland China.
Opponents: Chips and Midterm Elections
While Yellen advocates removing some tariffs on China, according to Archyde.com, U.S. Trade Representative Dai Qi prefers to keep those tariffs in order to develop a more strategic China trade strategy that protects U.S. jobs while reshaping China’s trade in trade behavior in global markets. Such an approach could even include imposing new strategic tariffs.
Another backdrop for Dai Qi’s opposition to the removal of tariffs on China is that the first phase of the trade deal signed by China and the United States in early 2020 expires, and U.S. officials say China has failed to fulfill its commitments in the agreement, namely in 2020 and 2021. Purchase an additional $200 billion in U.S. goods and services.
Chad P. Bown, a senior fellow at the Peterson Institute for International Economics (PIIE), told the BBC Chinese that under the agreement, China should buy a total of $502.4 billion in U.S. goods and services over the past two years, with China eventually buying $288.8 billion. , only 57% complete. As for the extra $200 billion, “China didn’t buy at all in the end.”
Dai Qi has said she will seek a meeting with Chinese Vice Premier Liu He to review China’s failure to comply with the phase one trade deal, including underpaying for U.S. goods. But “no results have been achieved” and her team “is actively negotiating and negotiating with China”.
And if Biden chooses to cancel the tariffs on China at this time, Dai Qi will lose bargaining chips on the negotiating table.
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The first phase of the trade deal signed by China and the United States in early 2020 expired. China then pledged to buy an additional $200 billion in U.S. goods and services in 2020 and 2021.
For Biden, another factor that has to be considered is the midterm elections in November. Currently, Democrats control the Senate and House of Representatives by a very narrow majority. Republicans need to win five more seats to regain the House majority, and just one more seat in the Senate to take control.
There are already signs that the 2022 midterm elections could be a so-called “wave election” with Republicans sweeping the majority. Biden’s approval rating is currently worrying, and his approval rating has been below 50% since last August.
For Biden, who has lost the support of many voters, the preferences of voters are worth considering. And an overwhelming majority of registered U.S. voters said they support higher tariffs on imports from China.
According to a Morning Consult poll released this week, 73 percent of respondents said they support the U.S. government’s trade remedy measures against China to protect U.S. industries and American workers, while those who support Trump’s tariffs on China Also high, at 71%.
Even with inflation at levels not seen since the 1970s, American voters seem willing to force companies to import from outside China or produce locally.
