Biden's upcoming new tariffs on China reflect 'lessons learned'


The White House's sweeping action to raise tariffs on China earlier this week “reflects lessons learned” about the country's behavior, according to a former official who helped the government review whether tariffs should be imposed.

Greta Paish, who until recently was general counsel in the office of the US Trade Representative, says Tuesday's White House announcement is the culmination of a two-year investigation and reflects the economic damage China is already causing to the US. Is delivering.

He 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 many sectors,” he said.

The Biden government's review begins in 2022 and focuses on duties that were first imposed in the Trump administration. Its apparent conclusion this week could impact tariffs on a range of industries, from electric vehicles to batteries, solar energy to 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 EVs from China, The Wall Street Journal reports. The move could increase the tariff rate from the current 25% to almost 100%.

US President Joe Biden gestures as he boards Air Force One before departing from Joint Base Andrews in Maryland on May 9, 2024.  Biden is heading to the West Coast to raise campaign funds in San Francisco and Seattle.  (Photo by Mandel Ngan/AFP) (Photo by Mandel Ngan/AFP via Getty Images)US President Joe Biden gestures as he boards Air Force One before departing from Joint Base Andrews in Maryland on May 9, 2024.  Biden is heading to the West Coast to raise campaign funds in San Francisco and Seattle.  (Photo by Mandel Ngan/AFP) (Photo by Mandel Ngan/AFP via Getty Images)

President Joe Biden on Thursday hinted at a trip aboard Air Force One before heading to the West Coast to raise money for the campaign. (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, alleging that “the US continues to politicize trade issues, abuse the so-called review process of Section 301 tariffs and plan tariff hikes “

“China will take all necessary measures to safeguard its rights and interests,” the spokesperson said.

The possible announcement next week also comes after another move by Biden that has angered China: his call last month to impose triple tariffs on Chinese steel and aluminum.

“China is not competing, they are cheating,” Biden said in announcing that plan, “and we've seen the damage here in America.”

The White House's upcoming action appears to affect a wide range of areas and comes after years of internal debate within the Biden administration over what direction to take on Chinese import tariffs.

In testimony before Congress last month, US Trade Representative Katherine Tai described the review as an effort to respond to China's unfair practices and to “consider seriously how our existing tools are addressing this problem.” Did.

He said at the time that China's unfair practices spanned many industries, including “steel, aluminum, solar panels, batteries, electric vehicles and critical minerals – just to name a few sectors.”

Perhaps the industry where cheap Chinese goods have already had the greatest impact is solar panel manufacturing. Just last month, a coalition of US solar manufacturers filed a petition with the Biden administration saying they have been “injured” by cheap Asian imports.

Figures like Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo have also been part of the administration's debate about striking the right balance between new duties on strategically competitive sectors of the economy and potentially reducing some tariffs on consumer goods.

It is unclear whether the new national security tariffs to be announced next week will be combined with other tariff reductions; Details of Biden's plans are sketchy.

Pesch, who helped lead the review under Ambassador Tai, said there was a middle ground between new duties and consumer prices.

“It's a balance but I think the focus is on making sure we have these important sectors that are good employers domestically,” he said.

He also noted substantial debate about the relationship between inflation and tariffs and whether reducing current US duties would have a significant impact on prices.

“The general answer was no, that removing the tariffs wouldn't stop inflation,” says Paish, now a partner at the D.C. law firm Willie Rein.

A Tax Foundation study of Trump's various tariffs — most of which Biden has kept in place — found that they are set to reduce long-term GDP by 0.21% and cost the economy the equivalent of a loss of 166,000 jobs.

Biden faces a challenge this fall from former President Donald Trump, who is proposing historically high new tariffs. These include tariffs of up to 60% on many Chinese goods and a 10% level on other major trading partners.

Trump also floated the idea of ​​imposing 100% tariffs on all automobiles from Mexico during a recent Time interview, but left the door open to doing so only in retaliation.

This week's announcement is set to further escalate the contradiction between the two presidential candidates. Both are looking to move up the duties, but they have competing visions.

In a recent interview, longtime trade policymaker Bill Reinsch summarized the differences between the two by describing Biden's approach to trade as sticks and carrots.

Biden also offers some credits and incentives, saying, “There are some things we need to produce in this country for security reasons and that's chips, batteries, critical minerals, PPE, pharmaceuticals.”

Trump, on the other hand, is “all suckers, no carrots.”

NEW YORK, NEW YORK - MAY 10: Former US President Donald Trump speaks to the media at the end of the day of his criminal trial for covering up hush money payments at the Manhattan Criminal Court on May 10, 2024 in New York City.  Trump was charged last year with 34 counts of falsifying business records in what prosecutors say was an effort to conceal a potential sex scandal before and after the 2016 presidential election.  Trump is the first former US president to face trial on criminal charges.  (Photo by Curtis Means - Poole/Getty Images)NEW YORK, NEW YORK - MAY 10: Former US President Donald Trump speaks to the media at the end of the day of his criminal trial for covering up hush money payments at the Manhattan Criminal Court on May 10, 2024 in New York City.  Trump was charged last year with 34 counts of falsifying business records in what prosecutors say was an effort to conceal a potential sex scandal before and after the 2016 presidential election.  Trump is the first former US president to face trial on criminal charges.  (Photo by Curtis Means - Poole/Getty Images)

Former President Donald Trump speaks to the media after the end of his criminal trial for covering up hush money payments in Manhattan Criminal Court on Friday. (Curtis Means – Pool/Getty Images) (Pool via Getty Images)

Trump aides say he would allow manufacturing in the US to grow organically, but it is an approach that is often criticized by Biden allies and some trade experts. At such high levels, some people are also concerned that it could lead to inflation.

Biden's approach, his aides insist, is one that aims to be more strategic and protect only those sectors of the economy where the national security need is greatest.

“This is part of a pattern of being targeted at specific concerns,” Paish says, adding that other recent administrative actions have been “fairly tailored and targeted.”

Ben Vershkul is Yahoo Finance's Washington correspondent.

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