UNITED STATES: According to sources familiar with the discussions, the Biden administration officials have revised their thinking about whether to eliminate some tariffs or possibly impose others on Beijing in light of China’s war games in the vicinity of Taiwan. For the time being, they have decided to put those options on hold.
While attempting to rein in inflation that is out of control, President Joe Biden’s administration has been mulling over numerous options for months to reduce the price of levies placed on Chinese imports under his predecessor Donald Trump.
It has considered a number of options, including removing certain duties, starting a fresh “Section 301” investigation into prospective areas for further tariffs, and lengthening a list of tariff exceptions to help American businesses that can only source specific items from China.
According to the White House, Biden hasn’t decided on the matter, and all of his options are still open.
The tariffs increase the cost of Chinese imports for American businesses, which drives up the price of goods for consumers. Before the midterm elections in November, which might give the Republicans control of one or both houses of Congress, Democratic presidential candidate Joe Biden is focused on bringing down inflation.
However, Beijing’s response to U.S. House Speaker Nancy Pelosi’s trip to Taiwan last week prompted a reevaluation by administration officials, who are eager to avoid taking any action that China might interpret as an escalation while also avoiding being perceived as backing down in the face of the communist nation’s aggression.
Ballistic missile launches and practises assaults on Taiwan, which China claims as its own, were conducted by its military for days.
One insider with knowledge of the most recent, as-yet-unreported developments in the process stated, “I think Taiwan has changed everything.”
“Before the events in the Taiwan Strait, the president had not made a decision, and he still hasn’t made one. Everything is still an option, and nothing has been placed on hold or shelved,” said Saloni Sharma, a spokeswoman for the White House. The president will be the only one to decide and base his choice on what is best for the country.
When asked why a decision took so long, Gina Raimondo, the secretary of commerce, cited the challenging geopolitical environment.
“It’s more tricky now that Speaker Pelosi has returned from her trip to Taiwan. The president is therefore evaluating his alternatives. He plays it pretty safe. He wants to ensure that we don’t take any actions that would harm American workers and labour,” She stated in a Bloomberg TV interview.
List of exclusions
The most drastic actions regarding tariff relief and escalation are currently on hold; thus, attention is being paid to the so-called exceptions list.
More than 2,200 import categories, including many essential chemicals and industrial components, had been granted tariff exemptions by the Trump administration. Still, they were set to expire as soon as Biden assumed office in January 2021. Only 352 of them have been reinstated by U.S. Trade Representative Katherine Tai. Business organisations and more than 140 US politicians have greatly pushed her to raise the numbers.
The following actions of the Biden administration might significantly affect hundreds of billions of dollars in trade between the two biggest economies in the world.
As they battle growing costs and limited supply, American sectors across the board, from consumer electronics and retail to automotive and aerospace, have been pushing for Biden to erase up to 25% levies.
Trump placed tariffs in 2018 and 2019 on hundreds of products from China valued at $370 billion in an effort to put pressure on China over its alleged theft of American intellectual property.
Senior administration officials, such as Treasury Secretary Janet Yellen, had suggested that lifting the levies, which were placed on “non-strategic” consumer goods and unnecessarily increased costs for consumers and businesses, may help reduce the current inflationary crisis. The tariffs, according to Tai, should be used as “major leverage” to pressure China into changing its behavior.
The administration’s considerations have been made more difficult for a number of reasons, in addition to China’s stance on Taiwan.
U.S. officials thought about removing some of the tariffs, but when they asked Beijing for a reciprocal rollback, they were turned down, according to two individuals.
According to one of the individuals, the unilateral lifting of some U.S. tariffs on Chinese imports has been delayed in part because China has not demonstrated any readiness to take reciprocal moves or fulfil its “Phase 1” trade deal commitments.
According to the Peterson Institute for International Economics, China didn’t actually purchase any of the extra items it pledged. Beijing was responsible for the COVID-19 epidemic, which broke out right after the agreement was signed in January 2020.
The tariffs imposed by Trump is currently the subject of a statutory four-year review by the office of the U.S. Trade Representative, which could take a few more months to complete. By August 23, the public must submit any final views on whether to retain them in place.
To “level the playing field” for American workers and lessen America’s reliance on Chinese suppliers, union groups led by the United Steelworkers have pushed USTR to maintain tariffs on Chinese imports.
According to the first source, Biden has been anxious about reducing tariffs partly because labour is a crucial constituency for him, and China hasn’t bought the things it had pledged to buy. The White House has refrained from providing a timetable for when a decision would be made in its entirety.