Sources say the US is reconsidering moves on China tariffs following Taiwan’s response

US President Joe Biden gestures as he meets with China’s President Xi Jinping during a virtual summit in the Roosevelt Room of the White House in Washington, DC November 15, 2021.

Almond Ngan | AFP | Getty Images

China’s war games over Taiwan have prompted Biden administration officials to recalibrate their deliberations on whether to scrap some tariffs or perhaps impose others on Beijing, putting those options aside for now, according to sources familiar with the deliberations .

President Joe Biden made no decision on the issue, officials said. His team has been wrestling for months with various ways to lower the cost of tariffs imposed on Chinese imports during Donald Trump’s administration in an attempt to curb skyrocketing inflation.

It has considered a combination of removing some tariffs, launching a new Section 301 investigation into potential areas for additional tariffs, and expanding a list of tariff exemptions to help US companies that only import certain supplies from China can obtain.

The tariffs make Chinese imports more expensive for US companies, which in turn makes the products more expensive for consumers. Bringing down inflation is a key Democrat Biden goal ahead of November’s midterm elections, which could shift control of one or both houses of Congress to Republicans.

But Beijing’s response to US House Speaker Nancy Pelosi’s visit to Taiwan last week sparked a recalculation by government officials eager not to do anything that could be viewed by China as an escalation, while trying to not to be considered a retreat in the face of the communist country’s aggression.

For days, China’s military engaged in ballistic missile launches and simulated attacks on the self-governing island of Taiwan, which China claims as its own.

“I think Taiwan has changed everything,” said a source familiar with recent developments in the process, details of which have not been previously reported.

exclusion list

A senior administration official clarified that Biden had made no decision.

“The President had not made a decision prior to the events in the Taiwan Straits and still has not made a decision, period. All options remain on the table,” the official said. “The only person who will make the decision is the President – and he will do so based on what is in our best interests.”

Since the most vigorous measures relating to tariff relief and tariff escalations have largely been postponed for the time being, the focus is on the so-called exclusion list.

The Trump administration had approved tariff exclusions for more than 2,200 import categories, including many critical industrial components and chemicals, but these expired when Biden took office in January 2021. US Trade Representative Katherine Tai has only reintroduced 352 of these. Industry groups and more than 140 U.S. lawmakers have urged them to significantly increase the number.

The next moves by the Biden administration could have a significant impact on trade worth hundreds of billions of dollars between the world’s two largest economies.

US industries from consumer electronics and retailers to autos and aerospace have called for Biden to scrap tariffs of up to 25% as they grapple with rising costs and tight supplies.

The tariffs were imposed by Trump on thousands of Chinese imports, then worth $370 billion, in 2018 and 2019 to pressure China over its alleged theft of US intellectual property.

Some senior administration officials, including Treasury Secretary Janet Yellen, had argued the tariffs would apply to “non-strategic” consumer goods that have unnecessarily increased costs for consumers and businesses, and that removing them could help ease rampant inflation. Tai argued the tariffs are “significant leverage” to be used to pressure China to change its behavior.

Multiple Factors

Several factors, in addition to China’s response to Taiwan, have complicated the government’s deliberations.

When US officials considered scrapping some of the tariffs, they requested mutual withdrawals from Beijing and were rebuffed, two sources said. A spokesman for the Chinese Embassy in Washington could not immediately be reached for comment.

One of the sources that said the unilateral lifting of some U.S. tariffs on Chinese imports has been suspended said it was partly because China has shown no willingness to take countermeasures or honor its commitments under the “Phase 1” trade deal fulfill .

That deal, reached with the Trump administration in late 2019, required China to increase its purchases of US agricultural and industrial goods, energy and services in 2020 and 2021 by US$200 billion from 2017 levels raise. China fell far short of those commitments, which included a two-year increase in US manufactured imports of $77.7 billion, including planes, machinery, vehicles and pharmaceuticals.

The Peterson Institute for International Economics estimates that China has not actually bought any of the promised additional goods. Beijing blamed the Covid-19 pandemic, which was just beginning when the deal was signed in January 2020.

The US Trade Representative’s office is currently in the middle of a mandatory four-year review of Trump-imposed tariffs that could last a few months. Final public comments on whether to keep them are due by August 23.

Union groups led by the United Steelworkers have called on the USTR to keep tariffs on Chinese goods to help create a “level playing field” for workers in the United States and reduce US dependence on Chinese suppliers.

Biden was concerned about the tariff rollback, partly because of labor, which is a key constituency for him, and China’s failure to buy the products the first source said it had agreed to buy. The White House has declined to set a timeline for a final decision. Sources say the US is reconsidering moves on China tariffs following Taiwan’s response

Joshua Buckhalter

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