May 17, 2022 05:17AM ET
By: AnalysisWatch
President Joe Biden will have to resolve a heated internal debate among his colleagues over whether to cut taxes on goods from China while his administration tries to fight inflation, according to two US officials and three others familiar with the discussions.
Biden administration officials have been debating for months the future of tariffs of up to 25 per cent on hundreds of billions of dollars of imports from China, imposed by former President Donald Trump, which cost US companies billions of dollars.
Treasury Secretary Janet Yellen is among those who want to reduce many of these tariffs, while Trade Representative Catherine Tigh wants to wait for a broader trade strategy with China that will focus on protecting American jobs and China's behaviour in global markets. This approach could also include new strategic tariffs.
The adviser says unions, which have played an important role in the Democrats' November campaigns, are opposed to easing tariffs at this time. Biden has personally told union leaders that he will be involved in the final decision on tariffs.
Inflation has risen 8 per cent over the past year, putting pressure on Biden and the Federal Reserve to reduce the cost of food, petrol and other consumer goods. Biden's Democrats face an uphill battle in November's midterm elections to retain control of Congress.
According to a person familiar with the debate, Yellen believes some tariffs are not in the economic interests of the US and will cost consumers dearly, regardless of the inflation argument.
According to some trade experts, a quicker way to reduce inflation would be to expand the number of exemptions available to importers of Chinese goods. Thousands of these have expired since Biden took office, but Tai has only restored the exemptions to 352, and more than 140 US lawmakers have called for the list to be expanded.
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