Clothes and school supplies included… after the price
Yellen and Liuhe discuss tariffs on China
“Inflation relief is unlikely to be significant.”
U.S. President Joe Biden is expected to announce cuts to high tariffs on some Chinese imports this week. This is a measure to ease inflationary pressures, the worst in 41 years.
The Wall Street Journal (WSJ) reported this on the 4th (local time), citing a source. The tariff cut includes consumer goods such as clothing and school supplies. It also plans to allow importers to request exemptions from high tariffs on Chinese products.
Tariff cuts on Chinese goods have been delayed due to disagreements within the Biden administration, as well as with the business community, labor circles and Congress. Within the administration, Treasury Secretary Janet Yellen has advocated lowering tariffs on China to contain inflation. On the other hand, USTR chief Catherine Ty and White House national security adviser Jake Sullivan are skeptical of the tariff abolition, saying it is an important lever to change China’s trade practices. President Biden appears to have sided with Treasury Secretary Yellen as inflation escalated and approval ratings plummeted ahead of the November midterm elections.
Former US President Donald Trump imposed high tariffs on Chinese imports four times from July 2018 to September 2019, raising concerns about China’s unfair trade practices and trade balance imbalance. The two sides reached an agreement in January 2020 on the condition that the U.S. withheld some tariffs and China would purchase an additional $200 billion worth of U.S. goods and services over two years. However, the complaint of the US is that China has not kept its promise to purchase goods. Currently, the U.S. maintains a 25% tariff on $250 billion worth of Chinese goods. Tariffs on $120 billion worth of Chinese goods have been lowered from 15% to 7.5% under an agreement in January 2020.
According to the Ministry of Commerce, Finance Minister Yellen Yellen and Deputy Prime Minister Liu He in charge of the economy had a video call on the morning of the same day to discuss sanctions on China, including the elimination of tariffs on China. The two sides also agreed to strengthen communication on global economic issues such as global supply chain stability, Bloomberg News reported.
But economists don’t see tariff cuts on Chinese imports doing much to dampen inflation. Meghan Hogan and Yi Lin Wang, analysts at the Peterson Institute for International Economics, analyzed that “abolishing high tariffs on Chinese imports would only have the effect of lowering the consumer price index by about 1 percentage point.”
Reporter Jeon Jeon-ri sljun@hankyung.com
