U.S. Trade Chief Signals Tariff Relief an Option as Prices Soar

Date: Tuesday, May 3, 2022
Source: Bloomberg

President Joe Biden’s top trade negotiator signaled that relief from U.S. tariffs on China is one option under consideration to confront the fastest inflation in four decades, while cautioning that the duties should be studied in the context of broader economic policy.

The tariffs should be examined as part of a look at strategies across the board, including monetary, fiscal and tax policy, U.S. Trade Representative Katherine Tai said in interview at the Milken Institute Global conference in Los Angeles on Monday.

Tai said that the U.S. needs to make sure that the tools it deploys to meet the short-term challenge of inflation are effective and don’t undermine the medium-term goal of changing the relationship with China. The tariffs have spurred some companies that were producing in China for the U.S. market to move their manufacturing and base of operation to other countries, Tai said.

“Are they on the table or not? All tools are on the table,” Tai said when pressed to address the tariffs. “The question is ‘What do you do with them?’”

Tai’s comments come after Treasury Secretary Janet Yellen last month suggested the U.S. is open to scaling back the widespread Trump-era tariffs on merchandise imports from China to help provide relief to Americans. The USTR as soon as this weekend may begin a mandatory review of the first group of tariffs on more than $300 billion in Chinese imports, imposed in response to accusations of unfair trade practices, needed to prevent their expiration.

Tai dismissed March research from the Peterson Institute for International Economics, which estimated that eliminating a wide array of tariffs, including those on Chinese goods, could reduce inflation by 1.3 percentage points.

“I really have to challenge the premise of that study,” Tai said. “I think it’s either something between fiction or an interesting academic exercise.”

 

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