Biden’s Fighting Inflation Step Yet – Community News
Us China

Biden’s Fighting Inflation Step Yet

At the same time, Biden has resisted a move that would do that: Lifting tariffs on Chinese imports would save the average household hundreds of dollars a year. Equally tempting, it would reverse the failed trade war policy of its discredited predecessor, Donald Trump.

But strategic and political considerations outweigh the allure. Whatever the benefit to the confused consumers, the implications at home and abroad for America’s most troubled international relationship raises the stakes higher than that.

“The reason for doing or not doing this shouldn’t be inflation,” said Richard Haass, a top State Department official under President George W. Bush, who now heads the Council on Foreign Relations. “The impact on US-China relations, and the domestic politics of US-China relations, would be greater than any impact on inflation.”

That powerful counter-current swirled last week when Biden had a virtual meeting with Chinese leader Xi Jinping. Ahead of the meeting, a series of business groups issued a public letter requesting an exemption from Chinese tariffs that they say will cost US importers $110 billion and the average American household $1,300 by 2020.

“These costs, compounded by other inflationary pressures, place a significant burden on American businesses, farmers and families trying to recover from the effects of the pandemic,” wrote the business groups ranging from the American Soybean Association to the Information Technology Industry Council. .

But White House officials said tariffs were not on the US agenda. After Biden and Xi talked for more than three hours and the White House was politically battered by its highest inflation in decades, no policy change was announced.

Biden, who took office after the violent, Trump-fueled January 6 U.S. Capitol uprising, has viewed his presidency as an opportunity for the U.S. to prove that democracies can outshine authoritarian regimes like China in the 21st century. On issues from human rights to Taiwan to the coronavirus, interactions between the world’s two most powerful nations have grown so much that Biden pitched the summit as an attempt to ensure competition “doesn’t turn into conflict.”

Yet he still faces Republican allegations of weakness over China policy, a staple of Trump’s 2020 campaign. While Haass called those attacks “absurd,” unilaterally lifting tariffs would only encourage Republicans to bolster them.

The Americans Worst To Do With The Rise In Inflation
Trump placed tariffs at the heart of his “America First” political message, addressing the grievances of workers who blamed global trade expansion for destroying jobs in U.S. manufacturing and lowering their living standards. The American Action Forum, which advocates the views of market-oriented Republicans, estimates that Trump’s tariffs and associated retaliation by trading partners currently reach more than $400 billion in imports and exports.

And the tariffs fell short of Trump’s goal of revitalizing U.S. manufacturing. In 2019, before the pandemic rocked the economy, the Federal Reserve said the manufacturing industry had effectively entered a recession.

But Biden has only eased tariffs on European steel and aluminum so far. The more drastic Chinese tariffs on imported consumer goods and semi-finished products that companies use to make finished products will remain in place.

Trade experts praise Trump for taking a harder line after years in which China had thwarted global rules by stealing intellectual property, subsidizing domestic industries and restricting imports at the expense of both corporate America and workers. He managed to get Beijing to relax restrictions on US agricultural imports and the activities of US financial firms in China.

Yet the modest effect of Trump’s policies on Chinese exporters failed to capitalize on the fundamental economic reforms he had pursued.

Here's What Joe Biden Can And Can't Do To Fight Inflation

“It really hasn’t done much for the Chinese,” noted Scott Lincicome, an analyst at the libertarian Cato Institute.

“In general, these tariffs fall almost 100% on American consumers,” added Jennifer Hillman, a former trade official under President Bill Clinton who now teaches law at Georgetown University. “The only question for Biden is, can you get anything for abolishing these tariffs?”

In a speech last month, U.S. Trade Representative Katherine Tai said only that “we will initiate a targeted tariff exclusion process” that could lift selected tariffs in a process that “best serves our economic interests.” But she noted that China has failed to deliver on previous promises to buy American goods and is maintaining an “unfair policy” that subsidizes domestic production of steel, semiconductors and solar products at America’s expense.

“I am committed to addressing the many challenges ahead in this bilateral process to deliver meaningful results,” promised Tai at the Center for Strategic and International Studies in Washington. “But above all, we must defend our economic interests to the utmost.”

That doesn’t mean Biden can’t find a politically acceptable path to the price-cutting benefits of lifting more Trump tariffs in the coming months. But that requires agile negotiations over concessions from America’s most formidable competitor.

“Like sanctions or war,[tariffs]are easier to initiate than to remove,” Haass concluded. “That’s why God invented diplomats.”

About the author

Rakesh

Add Comment

Click here to post a comment