Debate is heating up again over Trump-era tariffs on Chinese-made goods, with lawmakers on both sides calling for their removal amid rising inflation.
President Joe Biden has said he plans to meet “soon” with the Chinese head of state to discuss trade relations and is assessing possible steps to remove tariffs. “I’m making up my mind,” he told reporters while cycling in his home state of Delaware last weekend.
On Wednesday, U.S. Trade Representative Katherine Tai testified about her agency’s performance at a meeting of the Senate Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies. Subcommittee members questioned why the USTR refused to roll back the tariffs, despite its failure to curb China’s unfair trade practices.
“Chinese tariffs are, in my view, significant leverage – and a trade negotiator never strays from leverage,” Tai told the committee. However, the USTR needs to “use our tools more effectively,” she said, noting that the agency plans to deviate from its playbook and introduce “new tools” for “a fully news”.
Sen. Jeanne Shaheen (DN.H.) pressed the USTR’s timeline to develop a new, easier-to-navigate tariff exclusion process for U.S. businesses, which was ordered this spring to be revealed in early June. “More than three months have passed, and it’s unclear what process has been established,” Shaheen said, noting that “all members of the subcommittee have examples in their own state of how businesses are affected. “.
Declining to give a date for the release of the new rules, Tai said the administration is moving “in a deliberative spirit to ensure that all exclusion processes we implement and have implemented are fair, transparent and manageable”. The process, still under development, will aim to “give our stakeholders the opportunity to advocate for assistance at a very difficult time in the global economy”, she added.
Tai acknowledged that “the public debate recently has been very, very obsessed with the issue of tariffs” and the impact removing them would have on people facing financial hardship. The agency is cautious about any drastic action it might regret when market conditions change, she said.
“Whatever we have to do for ourselves… to overcome all the challenges we face today, we will one day find ourselves on the other side of those challenges,” she said. It is important that the United States does not “undermine our need to be more competitive” in a relationship that has had corrosive effects on many areas of the national economy, she added.
Following Tai’s testimony, former President Trump’s chief economic adviser Gary Cohn called the tariffs a “consumption tax” that is added “to the cost of many goods that American consumers buy,” an opinion that industry groups like the Footwear Distributors and Retailers of America, the American Apparel and Footwear Association and the National Retail Federation have long shared.
But “some of the tariffs make sense” and should stay in place, Cohn said. “If we make something here in the United States, we have to protect our manufacturers,” he told CNN. National Council of Textile Organizations President and CEO Kim Glas argued for keeping Section 301 tariffs on apparel and finished textiles for the benefit of U.S. producers and free trade partners.
Cohn said products that aren’t made in the United States, on the other hand, shouldn’t be subject to additional duties that hurt consumers. While “nothing is going to solve inflation,” Cohn said the U.S. government needs to “do as many things as possible to try to bring prices down.”
“If you get rid of those tariffs, the price of those goods should go down,” he added.