President Biden is still said to be considering revoking tariffs on imports from China. He shouldn’t!
It’s been a few weeks since we last checked in on the discourse over tariffs on imports from China, and debate continues within the Biden administration on whether to revoke them.
To be clear: Revoking tariffs would be a massive mistake. The Chinese Communist Party (CCP) — which hasn’t met any of its promises in the Phase 1 trade deal and continues to deploy a whole host of predatory trade practices — would be given a huge win it doesn’t deserve. Doing so would also undercut America’s factory workers and manufacturers at a time when it’s clear rebuilding manufacturing and reshoring supply chains is critical to our national and economic security.
And yet President Biden is still said to be considering removing at least some of the tariffs as a way to show Americans he’s doing something to fix inflation. The problem with that idea is that there’s growing agreement that revoking the tariffs won’t actually do anything about inflation.
Financial powerhouse Barclays said Monday that revoking the tariffs will have only a mild impact on inflation, Bloomberg reported. Barclays predicted that if “there’s a complete rollback of tariffs, the maximum direct effect on US inflation is a one-time reduction of 0.3 percentage point.”
That’s right around what the Peterson Institute for International Economics found, by the way. That organization, which is probably as anti-tariff as they come, predicted that removing tariffs on Chinese imports would lower the consumer price index by just 0.26%.
Suffice to say, removing the tariffs isn’t going to be the quick-and-easy game-changer that some pundits make it out to be. But, revoking them will cause a bunch of other problems that will make things harder for Americans in the long run.
We know, for example, that the United States needs to do more to grow its domestic manufacturing base, particularly for critical products like semiconductors. We also need to boost our production of clean energy technology, for things like wind turbines and electric vehicles. If we do it right, we will create millions of new jobs and ensure the United States is able to make the things it needs.
To get the job done, the United States must make strategic investments in these areas, which is why Congress must finalize the Bipartisan Innovation Act ASAP. But the United States also must be willing to enforce its trade laws and stand up to the CCP, which uses predatory practices to dominate industries. That’s the whole reason why tariffs were put on Chinese imports in the first place!
Revoking the tariffs now will remove what U.S. Trade Representative Katherine Tai described as a “significant piece of leverage,” giving the CCP a victory that it didn’t earn and making it easier for China to dominate markets once again. American workers and manufacturers will pay the price, as Alliance for American Manufacturing President Scott Paul recently wrote:
“Lifting tariffs will mean increased import competition from a state that isn’t playing fairly. And there will be domestic economic costs to doing so. Factories will close, jobs will be lost, and paychecks won’t arrive. That will cause economic pain to union households, a crucial part of the president’s political coalition. Exposing them like this would be a great way to sap their political enthusiasm.”
Other labor leaders also are opposed to lifting the tariffs. United Steelworkers International President Tom Conway, writing on behalf of the Labor Advisory Committee on Trade Policy and Negotiations, wrote in official comments sent to the Biden administration that “[n]othing has changed that would merit unilaterally lifting the tariffs; If anything, President Xi and the CCP have only doubled down on their strategy and approach.”
“Too many U.S. companies have failed to take needed actions to address the threat posed by CCP policies. Many continue to outsource production, and research and development, undermining U.S. competitiveness and national security interests. They have failed to respond to the signals clearly and continuously sent by the CCP that it is not interested in competing, but in winning and dominating key industries. Our government must act in the national interest to strengthen our economy for the future.”
Once you break everything down, it’s pretty clear that the CCP has done nothing to merit lifting the tariffs, and there’s really no strategic benefit for the United States to do so.
Inflation is just the latest news hook that corporate America is using to try to get the tariffs lifted. And they want the tariffs lifted because of greed, pure and simple. Corporate America abandoned the working class so it could exploit China’s workers and environment to make stuff on the cheap. For more than two decades, corporations have lined their pockets thanks to all those cheap imports.
The tariffs were the first bit of real pushback they had to deal with, and they didn’t like it.
But there was always a cost. Americans in industrial towns understood it first, but the whole nation felt it over the past three years. There’s a reason why we didn’t have any face masks when a global pandemic struck; all that production had been sent over to be made by our chief geopolitical adversary.
The answer to these supply problems — and the long-term answer to solving inflation — is for the United States to increase its manufacturing capabilities and become far less reliant on products from China. Revoking tariffs now would be a failed political stunt that will only set us back, and for no reason at all.