Business groups are lobbying President Biden to cancel tariffs on hundreds of billions of dollars of Chinese imports, arguing that doing so would help alleviate inflation.
They say raising those rates would lower the costs Americans pay for a number of common products, including clothing, sunscreen, soap, furniture, appliances, bicycles, and consumer electronics.
Biden administration officials are divided on the issue, with some disputing the idea that the tariff relief would have a significant impact on inflation, and unions with close ties to the president are pushing the White House to keep tariffs in place.
However, business lobbyists say this is their best chance right now to convince Biden to reduce or completely eliminate China’s tariffs first imposed by the Trump administration in 2018 and 2019.
“All options must be on the table to help tackle inflation, and this is the quickest and easiest we can take right now,” said Jonathan Gold, Vice President of Supply Chain and Customs Policy at National Retail. Federation.
“It’s not a cure-all, but it will certainly help many businesses and consumers if we can reduce the cost of some of these goods, especially some of the basic necessities that have been skipped due to tariffs.”
Biden said he will do whatever it takes to fight inflation, including a potential Trump-era tariff review. Commerce Secretary Gina Raimondo said in a televised interview with CNN on Sunday that Biden instructed his team to analyze whether some tariff hikes could cool consumer prices.
“I’ll say it depends on what we’re talking about and what kind of products,” Raimondo said, noting that tariffs on Chinese steel and aluminum would remain in place to protect US companies. “There are other products, household items, bicycles, etc., and it might make sense. And I know the president is watching us. ”
The increase in tariffs, which apply to approximately $ 335 billion worth of Chinese goods, would increase the profits of some of the largest US retailers, manufacturers, tech giants, and other US companies that pay tariffs of up to 25% to import affected goods. China.
Corporate lobbying groups are focusing their messages on the costs that are passed on to consumers, often citing a Congressional Budget Office study that estimates Section 301 rates cost the average American family more than $ 1,200 in real income in 2020 and have increased consumer prices by 0.5%.
“Not only are these taxes highly regressive, hitting low-income Americans hardest on basic needs, but they can be removed with the stroke of a pen,” said Steve Lamar, president of the American Apparel and Footwear Association.
Business groups also cite a free trade study by the Peterson Institute for International Economics that finds that lowering tariffs on all imported goods could reduce inflation by 1.3%. The same study found that the increase in tariffs on Chinese imports alone would only lower inflation by less than 0.3% in the short term, but the total impact could reach 1% in the long run.
“The rates are an absolute contributor to today’s high cost of living,” said John Murphy, senior vice president for international policy at the US Chamber of Commerce. “These are taxes paid by the Americans and most of them have no strategic logic.”
The White House is frantically looking for ways to slow inflation to 40-year highs, which rose 8.3% in the past 12 months ending April due to supply shocks stemming from the slowing pandemic.
But US Trade Representative Katherine Tai questioned the effectiveness of the tariff relief in fighting inflation, calling the Peterson Institute study “something between fiction and an interesting academic exercise” last month.
Tai, who does not want to lose leverage in trade negotiations with China by lifting tariffs, has deviated from other Biden officials, including Treasury Secretary Janet Yellen, who said last month that some of the Chinese tariffs “imposed. more damage to consumers and businesses. ”
“If we are going to tackle an issue like inflation, and given the seriousness it requires, then our approach to the tools to mitigate and address that inflation must respect the fact that it is more complicated than just tariffs at the border,” Tai said Monday at a Washington International Trade Association event.
Unions with close ties to Biden are another obstacle to tariff changes. Several unions filed a comment to Tai’s office on Monday calling for Chinese tariffs to be extended, citing jobs lost in the United States due to Chinese government business practices.
“Nothing has changed that deserves to unilaterally lift tariffs,” wrote United Steelworkers President Thomas Conway on behalf of the Labor Advisory Committee on Trade Negotiations and Trade Policy, a coalition of unions that advises the executive branch in commercial matter. “If anything, President Xi and the [Chinese Communist Party] they only doubled their strategy and approach.
Conway noted in the letter that members of the advisory board, which include the International Brotherhood of Teamsters, United Auto Workers and Service Employees International Union, are “united in the idea” that China’s tariffs should be extended.
Tai is gathering feedback from companies and other interested parties as part of a four-year review of China’s tariffs to be completed in the coming months.
The business groups hope that Biden’s decision on Monday to waive tariffs on solar panel imports from Southeast Asia is a signal that the White House agrees the tariffs can harm key industries.
Corporate lobbyists are pushing for widespread reductions or lifting of Chinese tariffs, but would settle for a measure to make it easier for US companies to be exempt from tariffs as a consolation prize.
“The expiration of critical exclusions granted to protect the competitiveness of domestic manufacturing has increased input costs, making products manufactured in the United States more expensive than those of foreign competitors, harming manufacturers and workers in the United States,” wrote the National Association of Manufacturers in a recent letter to Congressional leaders.