Could lowering tariffs on China be a way to lower inflation in the US?
Americans are suffering price rises on everything from mortgages to gasoline and President Biden is considering removing tariffs to lower prices.
President Biden is considering lowering, or removing completely, the trade tariffs imposed on China during the Trump administration. Speaking to reporters on Tuesday, Biden said the move was being evaluated as part of the White House’s plan to address the high rate of inflation.
Economists have called on Biden to remove the China tariffs to help lower the costs of essential products. The Biden administration has already began the first stage of a four-year review on the tariffs, but there is no indication as to the outcome.
In response to a question on the tariffs on China, Biden said: “We’re discussing that right now. We’re looking at what would have the most positive impact.”
Will removing the China tariffs help control inflation?
Already the Biden administration has acted to ease some of the tariffs on Chinese imports but the majority still remain. It is thought that around $350 billion of annual imports are subject to the steep tariffs, with Beijing imposing similar restrictions on American agricultural products and US-made goods.
The tariffs make it more expensive for American businesses to import the goods from China, and that cost is often passed on to the consumer, making the product more expensive to buy. This was designed to encourage consumers to buy American but the higher price of imports is now contributing to the sky-high rate of inflation.
Easing tariffs, it is hoped, will therefore help alleviate the inflationary pressures facing importers in the US.
During a White House briefing after Biden’s speech on Tuesday, press secretary Jen Psaki said there was “an ongoing review” of American tariffs on China.
“He’s weighing new ones, yes, because it’s an ongoing process and there are more that are still in place,” Psaki said.
“We are continuing to review where it would be advantageous take steps that would help ... increase wages and help certain industries that are impacted by these tariffs in a way that we don’t feel is effective,” she added.
Biden promises action on inflation
Inflation was the main topic of Biden’s speech on Tuesday, and he pointed to the pandemic’s effect on the global supply chain and Russia’s invasion of Ukraine as the two driving factors.
Speaking at the White House, Biden said: “My plan attacks inflation and grows the economy by lowering costs for working families, giving workers well-deserved raises, reducing the deficit by historic levels and making big corporations and the very wealthiest Americans pay their fair share.”
However many have also said that the huge spending legislation passed by Biden last year served to overheated the volatile economy, pushing up the rate of inflation. He made clear that inflation is now a top priority for his administration and reiterated the importance of the Federal Reserve in controlling it. Last week the central bank upped interest rates by half a percentage point in a bid to stifle the rampant inflation.
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