Biden is reportedly considering lifting Trump-era tariffs on Chinese goods. Could that help tame U.S. inflation?
That means that a potential tariff reduction might not give the Biden administration the political boost it wants.
There is a risk that “reductions in tariffs might at best have a limited and delayed impact on inflation, and would highlight the government’s impotence in managing inflation with the very limited policy tools at its disposal,” says Prasad. “Clearly, a tariff reduction would benefit both countries, but reducing tariffs without any concessions or commitments from China could result in unpalatably high political costs for the Biden administration relative to the economic benefits.
Still, Barry says that members of the U.S.-China Business Council oppose the tariffs, “because they do more harm than good.” He says lifting tariffs would be meaningful for U.S. companies as some firms have “paid hundreds of millions of dollars in extra tariff fees to the U.S. Treasury.” He cites one of the last loudspeaker makers in the U.S., which complains that his products are no longer competitive because of the 25% tariffs on some components he imports from China.
Says Barry: “We want them all lifted, reciprocated by China, and negotiations restarted immediately on resolving the growing list of trade and other disagreements between the two largest economies in the world.”
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