Biden could lift some tariffs on China as he seeks solution to rising costs

By Kevin Liptak, CNN

President Joe Biden is still debating whether to lift some tariffs on China put in place by his predecessor as he seeks from his authorities ways to lower the prices that have slumped his approval ratings.

Biden is on track to announce a tariff decision within weeks, according to an official familiar with the matter, though he has yet to make a final decision.

Inflation has proven a frustrating challenge for the president, who instructed his team to continue looking for ways to reduce the financial burdens on Americans. In Oval Office meetings and conversations with his senior advisers, Biden said his economic achievements were clouded by record high gasoline prices and rapid increases in the costs of other consumer products.

Biden has limited options to bring those prices down and has relied on the Federal Reserve to manage inflation. Yet his main tactic – raising interest rates – has sent stock markets tumbling and raising fears of an impending recession.

It is against this backdrop that Biden is considering lifting some of the Trump-era tariffs, which applied a 25% duty on billions of dollars worth of Chinese goods. They aimed to reduce the US trade deficit and force China to adopt fairer practices. But China’s behavior has not changed, and the Biden administration says Beijing has not honored its agreements on buying American agricultural products included in former President Donald Trump’s trade deal.

Biden gave the impression in internal meetings that he was leaning toward easing some of the tariffs but did not make a final decision, officials said. He asked his team for a more detailed analysis of what lifting some of the tariffs might mean for prices, as well as various options for action. Officials said Biden was eager to take any action that could combat high prices, even if the actual effect of lifting tariffs is small, to show the American people that he is focused on the issue.

Biden’s team believes they need to make a decision as soon as inflation continues to drive down the president’s approval ratings. The issue has been debated internally for months and sparked an internal split within Biden’s team.

Some advisers, including U.S. Trade Representative Katherine Tai, have advocated leaving them in place because China has failed to meet its commitments under the Trump-era trade deal. Other Cabinet members, including Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo, favor lifting some tariffs on certain goods.

Biden has also come under pressure from some Democrats and labor unions to keep the tariffs in place to protect American jobs.

“We don’t think now is the right time to ease tariffs on China,” said Liz Shuler, the AFL-CIO chairwoman who Biden spoke to Tuesday at the group’s convention in Philadelphia. .

“We think that would have a marginal impact, at best, on inflation,” Shuler told CNN. “What really needs to happen is what the president talked about yesterday: looking at ways to cut costs for working families.”

But some influential outside economists have encouraged the administration to lift at least some of the tariffs,

“I think if we can reduce tariffs where those tariffs are not strategic and hurt us, but don’t do much for the Chinese, I think it can make a significant contribution to reducing inflation.” said Larry Summers, treasury secretary to former President Bill Clinton who raised concerns about inflation last year that were mostly brushed off by the White House.

“I think it’s going to take a while to put that fire out, and it’s going to burn for a while, and it’s not going to be completely comfortable while we put the fire out. It’s just a consequence of the situation we’re in,” Summers told CNN’s Don Lemon on Tuesday.

Still, easing some of the tariffs – which apply to all sorts of household goods, including clothing and electronics – can only have a limited effect on lowering prices. Biden’s top economic advisers have limited expectations about the amount of money U.S. consumers would save once tariffs were lifted.

Yellen said last week that lifting some tariffs on China could help lower prices but should not be seen as a solution to the US inflation problem.

“Some reductions may be warranted,” Yellen told lawmakers in congressional testimony. “It could help bring down the prices of things that people buy that are expensive. I want to make it clear that I honestly don’t think pricing policy is a panacea when it comes to inflation.

Yellen noted that the goods account for only a third of consumption, pointing out that China has been “guilty, I believe, of many unfair trade practices.”

Still, Yellen said the Biden administration is reviewing its pricing policy and that changes could take place in the coming weeks.

Brian Deese, the director of the National Economic Council, also said on CNN last week that Biden would announce a decision in the “coming weeks.”

Speaking on Tuesday as Biden traveled to deliver a speech at a labor convention, White House press secretary Karine Jean-Pierre called Trump’s tariffs “irresponsible” and said that they had not “advanced our economic or national security”.

“We are discussing this and working to align these random tariffs and our priorities to protect the interests of our workers and our critical industries; boosting American workers, wages and creating jobs; ensuring the resilience of our supply chains; maintain our technological lead; and advance our national security,” she said.

“I have nothing to share on the decision of the president, for the moment”, continued Jean-Pierre. “As you know, this is something we are discussing internally.”

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Post expires at 10:23am on Monday June 27th, 2022