Washington-President Biden is considering whether to withdraw some of the tariffs imposed on Chinese goods by former President Donald J. Trump, hoping to mitigate the fastest price increases in 40 years.
Business groups and some externalities have said the president will be an important step that can be taken to reduce consumer costs immediately, and the administration is to ease at least some of the import taxes. Is putting pressure on.
Still, any government action to raise tariffs is unlikely to have a major impact on inflation. Reach 8.6% in May — On the other hand, the political impact can be serious. This year’s influential study predicted that tariff hikes could save households $ 7,97 a year, but government officials said Biden couldn’t roll back the entire federal government. There are and states that the actual effect is likely to be much smaller government tariffs and other protectionist measures.
Tariff debates come at times of economic instability. Sustainable inflation shatters consumer confidence, pushing the stock market down 20% from January’s highs into a bearish territory and threatening a recession as the Federal Reserve moves rapidly to raise interest rates. Fanned.
Some government economists personally estimate that the tariff cuts Biden is considering will reduce overall inflation by just a quarter percentage point. Still, as a sign of how much inflation has risen in political affairs, the president may have few other options, and authorities are considering at least partial easing anyway.
China’s tariffs are raising the price of goods by basically adding taxes to the amount that US consumers have already paid for imports. Theoretically, if a company stops lowering or raising prices for these products, it can reduce inflation by eliminating tariffs.
Biden said controlling inflation depends primarily on the Federal Reserve. The Federal Reserve is trying to cool demand by increasing the cost of borrowing and spending. The Federal Reserve is expected to raise interest rates on Wednesday, which is probably the largest increase since 1994 as it seeks to curb sustained inflation. The prospect of a significant rate hike has plunged into Wall Street. Bear market area Last monday Stable on Tuesday..
The move to fine-tune prices can bring significant trade-offs. It encourages companies to maintain their supply chain in China and could defeat another White House priority for returning work to the United States. And it’s an attack that removes Mr. Biden and his parliamentary Democratic allies from the hook when the US’s economic relations with China become openly hostile, deepening the wrinkle problem in the midterm and next presidential elections. May be exposed.
China has not yet fulfilled its promises as part of Mr. Trump’s negotiated US-China trade deal. Purchase failed Large amounts of natural gas, Boeing planes and other American products. Mr. Trump has imposed tariffs on most of the products that the United States imports from China as part of a pressure campaign aimed at forcing China to change its economic practices. After more than two years, the U.S. maintains 25% tariffs About $ 160 billion Of Chinese goods, an additional $ 105 billion, mainly consumer goods, is taxed at 7.5%.
While Biden has criticized Trump’s way of exercising tariffs, he also acknowledges that China’s economic practices pose a threat to the United States.
Understand inflation and its impact on you
Business groups like the US Chamber of Commerce and economists like Lawrence H. Summers, Treasury Secretary under President Bill Clinton, say the White House helps consumers cope with rising prices. Asked to eliminate as much tariffs as possible.
Summers and others have authoritatively quoted a March study on the issue from economists at the Peterson Institute for International Economics. Insisted A “feasible package” of tariff elimination, including the abolition of various levies and trade programs, as well as those applied to China, temporarily lowered the consumer price index by 1.3 percentage points, 797 per household in the United States. Dollar.
Tariff cuts are “probably the most powerful microeconomic or structural action the government can take to reduce prices and inflationary pressures relatively quickly,” Summers said in an interview.
But even those in the administration who support tariff easing suspect that this move will be produced somewhere close to the amount of bailouts Mr. Summers and others have predicted.
Treasury Secretary Janet L. Yellen, a proponent of tariff rollbacks, told the House Committee last week that “some cuts could be justified, lowering the price of those that are burdensome for people to buy. I think it will help. ” “I’d like to make it clear, but to be honest, I don’t think tariff policy is a panacea for inflation.”
Yellen met with the National Retail Federation Board of Directors on Tuesday. The National Retail Federation has long opposed tariffs and recently Eliminating them will mitigate inflation.
One of the key questions is whether a tariff-granted company will actually pass on those savings in the form of a low price or choose to absorb them as a profit.Consumers have continued so far Pay more for everyday itemsThe fact that companies are citing in their call for profits with investors as a reason they can charge more.
David French, senior vice president of government relations at the National Retail Federation, says the government is trying to understand how quickly tariff cuts can lead to price changes, ensuring that savings are passed on to American consumers. Said he was asking retailers.
“In the administration’s view, there is a price rollback and I think money will be off the price tag,” he said. “I don’t know if there will be such a dramatic change.”
For example, instead of a price cut, the store may choose to postpone the price increase further. Retailers “do everything they can to show dramatic price changes as much as possible,” he said, but still face supply chain pressure in terms of cost.
Rising prices have plagued Americans throughout the economy, depleted family purchasing power, and helped Biden’s approval rate steadily decline. The consumer price index in May rose 8.6% year-on-year, the first growth rate in 40 years. Biden says he has made the fight against inflation a top economic priority.
Last week, Mr. Biden announced 2 years rest About tariffs on imported solar panels. This has the potential to reduce costs for domestic consumers, but has effectively anticipated the Commerce Department’s investigation into illegal trade practices by Chinese manufacturers.
Popular Democrats, such as domestic trade groups, Labor leaders, and Ohio Rep. Tim Ryan, were trapped in a highly competitive Senate race and urged Mr Biden to maintain tariffs. Ryan held a press conference on Tuesday urging Biden not to give Beijing financial grounds.
Economists are divided on how much inflation can be mitigated by the government by eliminating tariffs.
Inflation FAQ
What is inflation? Inflation Loss of purchasing power over timeThat means that tomorrow the dollar will not rise as much as it does today. This is usually expressed as an annual change in the prices of daily necessities and services such as food, furniture, apparel, transportation and toys.
The inflation calculations quoted by Mr. Summers and others are far more than what Biden is actually considering, such as the popular “Bai America” program that requires the federal government and certain contractors to buy American products. This is because it includes extensive policy easing. Goods, even if they are more expensive.
The Peterson Institute for International Economics research is “something between fiction or interesting academic exercises” that doesn’t capture the true pain that Americans are feeling, said Katherine Tai, US Trade Representative. In an interview last month..
Kim Glass, chairman of the National Council of Textile Organizations, which has worked with the government to maintain tariffs, said in her industry that tariffs on Chinese products, which are already much cheaper than other alternatives, are “dollar penny”. The country that said it had reached.
Customs prices apply to the price of goods arriving at the border, not the final retail price charged at the store. For Chinese jeans, the import price for the first two months of 2022 was $ 4.28. This means that a 7.5% tariff has been added to consumer costs by only 32 cents. Most of the impact on stickers is the retail markup, which can be $ 30, $ 40, or $ 100 for jeans.
This issue split Mr. Biden’s closest adviser. Mr. Thailand; Jake Sullivan, National Security Advisor. Tom Billsack, Secretary of Agriculture. Some argue that it is unreasonable to withdraw taxes if Beijing does not offer a concession. We’re screwed To fulfill the promise of a trade agreement.
But Yellen, Secretary of Commerce Gina Raimondo, and other officials are in favor of reducing taxes on certain household items, which they say have little strategic importance, people familiar with the dispute say. rice field.
Yellen said in a hearing last week that the Biden administration was reviewing tariffs and could reveal rollbacks or exclusions in the coming weeks.
A White House spokesman quoted the ongoing nature of the debate and did not say how much he believes inflation-reducing government economists are possible from tariff rollbacks. Another senior government official is considering several models of how the White House will affect inflation, whether tariffs have been eliminated by the exclusion process, or whether China has eliminated them all at once. We responded by raising our own tariffs.
Keith Bradshire Contributed to the report from Boston.
