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Biden’s Upcoming New Tariffs on China Reflect “Lessons Learned”
A sweeping White House move to raise tariffs on China as early as next week “reflects lessons learned” about the country’s behavior, according to a former official who helped lead the administration’s review of what tariffs should be imposed. .
The White House announcement, expected on Tuesday, is the culmination of a two-year investigation and reflects the economic damage China is already inflicting on the U.S., says Greta Peisch, who until recently was general counsel in the U.S. Trade Representative’s office. USA.
She cited unfair trade practices in areas such as solar panels and electric vehicles.
“We have seen the impact of China’s industrial policy and excess capacity in several sectors,” he added.
The Biden administration’s review started in 2022 and is focused on duties that were first imposed under the Trump administration. Its apparent conclusion next week could impact tariffs on a range of industries, from electric vehicles and batteries to solar energy and critical minerals.
Bloomberg was the first to report the administration’s plan to announce the results of this long-awaited review.
The announcement will also quadruple tariffs on China’s EVs, according to a Wall Street Journal report. This measure could increase the tariff to around 100% from its current level of 25%.
President Joe Biden gestures Thursday as he heads to board Air Force One before heading to the West Coast for campaign fundraising. (MANDEL NGAN/AFP via Getty Images) (MANDEL NGAN via Getty Images)
During a press conference on Friday, China’s Foreign Ministry responded to the reports by accusing “the US continues to politicize trade issues, abuse the so-called Section 301 tariff review process, and plan tariff increases.”
“China will take all necessary measures to defend its rights and interests,” the spokesperson added.
‘We saw the damage here in America’
Next week’s likely announcement also comes on the heels of another Biden move that angered China: his call last month triple tariffs on Chinese steel and aluminum.
China “isn’t competing, they’re cheating,” Biden said when announcing this plan“and we’ve seen the damage here in America.”
The White House’s next action appears set to impact a broader range of sectors and comes after years of internal debate within the Biden administration over what direction to take on Chinese import duties.
In testimony before Congress last month, U.S. Trade Representative Katherine Tai described the review as an effort to respond to China’s unfair practices and take a serious look at how our existing tools are solving this problem.
She added at the time that China’s unfair practices span a range of industries, including “steel, aluminum, solar panels, batteries, electric vehicles and critical minerals – just to name a few sectors.”
The story continues
Perhaps the industry where cheap Chinese products have already had the most notable impact is solar panel manufacturing. A coalition of US solar manufacturers filed a petition with the Biden administration last month saying they were “undercut” by cheap Asian imports.
Figures such as Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo were also part of the administrative debate over how to find the right balance between new taxes on strategically competitive areas of the economy and the potential reduction of some taxes on commercial goods. consumption.
It is unclear whether the new national security tariffs likely to be announced next week will be combined with reductions in other tariffs; details of Biden’s plans remain vague.
Peisch, who helped lead the review under Ambassador Tai’s leadership, noted that there was a compromise between new duties and consumer prices.
“It’s a balance, but I think the focus has been on making sure we have these important sectors that are good employers here domestically,” she said.
She also noted the widespread debate over the link between inflation and tariffs and whether reducing current US duties would have a marked impact on prices.
“Usually the answer was no, that removing tariffs would not stop inflation,” says Peisch, who is now a partner at the D.C. law firm Wiley Rein.
A Tax Foundation study of Trump’s various tariffs – most of which Biden kept in place – concluded that they will reduce long-term GDP by 0.21% and cost the economy the equivalent of 166,000 jobs.
The tariff policy
This fall, Biden faces former President Donald Trump, who is proposing new historically high tariffs. They include taxes of up to 60% on many Chinese products and 10% levels in other major trading partners.
Trump also floated the idea of a 100% tax on all cars from Mexico during a recent interview with Time, but left the door open to doing so only in retaliation.
Next week’s announcement is expected to heighten the contrast between the two presidential candidates. Both seek to increase obligations, but have competing approaches.
In a recent interview, former trade policymaker Bill Reinsch summed up the differences between the two, describing Biden’s approach to trade as a sticks and carrots approach.
Biden offers some credits and incentives while saying, “There are some things we need to produce in this country for safety reasons: chips, batteries, essential minerals, PPE, pharmaceuticals.”
Trump, on the other hand, “is all tough, no carrots.”
Former President Donald Trump speaks to the media after his criminal trial for allegedly covering up hush money payments ended Friday in Manhattan Criminal Court. (Curtis Means – Pool/Getty Images) (Pool via Getty Images)
Trump’s allies say he will allow industry to grow organically in the U.S., but it’s an approach often criticized by Biden allies and some trade experts as too blunt. At such high levels, some also worry could stimulate inflation.
Biden’s approach, his allies insist, is intended to be more strategic and protect only those areas of the economy where the need for national security is greatest.
“This is part of a pattern of focusing on specific concerns,” says Peisch, noting that other recent actions by the administration have been “very tailored and targeted.”
Ben Werschkul is the Washington correspondent for Yahoo Finance.
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