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With US President Joe Biden looking to cool inflation, some trade analysts say the time has come to lift punishing tariffs on Chinese goods. Photo: Reuters

China implores US to drop tariffs that punish Americans and Chinese alike

  • Amid rising risks of inflation, the Biden administration may lift some tariffs on Chinese goods – punishing measures that analysts say have backfired on the US economy
  • Beijing’s request comes after it extended tariff exemptions on some US products in April for the seventh time

China has urged the Biden administration to remove tariffs on Chinese products, imposed by his predecessor Donald Trump, amid growing discourse in the United States over ways to tame the soaring inflation.

US President Joe Biden said on Tuesday said that he could drop some of the tariffs, while repeatedly blaming the coronavirus pandemic and Russia’s invasion of Ukraine for rising costs.

Ministry of Foreign Affairs spokesman Zhao Lijian said on Wednesday that US exports to China since the trade war started in 2018 have dropped below the pre-war level, and that the US lost more than 240,000 jobs during the period.

“The data indicates that the trade war does nobody any good. It is time for the US government to reconsider and remove the tariffs as soon as possible,” Zhao said.

“There is no winner in a trade war or tariff war. The US’ unilateral tariffs imposed against China do not help us, nor do they benefit the US or the world.”

Last week, US Trade Representative (USTR) Katherine Tai said her agency had started the expiry review of Section 301 tariffs of up to 25 per cent on Chinese products, with the first round to cover US$50 billion worth of Chinese products from July, when the tariffs will expire.

The US released inflation data for April on Wednesday showing an 8.3 per cent increase in the Consumer Price Index. The figure came amid market expectations that inflation would ease from March’s four-decade high of 8.5 per cent. But while inflation may be decelerating, it is running around the fastest rate since the 1980s.

“The US administration wanted to use the tariffs as leverage in bargaining with China, but the tariffs become useless and backfired on the US economy,” said Lu Xiang, a researcher on US issues with the Chinese Academy of Social Sciences.

It will be a top priority for the US to address inflation in the coming months, and the removal of tariffs should be seriously considered to ease the burden on the US economy and its consumers, Lu said.

Beijing extended tariff exemptions on some US products in April for the seventh time, while business associations and some US congressmen have long called for tariff relief.

The USTR’s willingness to adjust the tariff scope stems from economic and political demands at home
Bo Zhengyuan, Plenum

Plenum, an independent research firm based in Beijing, said the review is the strongest indicator of the USTR’s openness to reducing some tariffs. Tai said the review would be a “robust” consultative process, including collecting a range of industry comments and assessing potential economic impacts.

“The tariff mechanism is likely to stay without any major rollbacks,” said Bo Zhengyuan, a partner with Plenum. “Tai has not once hinted at tariff rollbacks since she entered office, with tariff exclusions always her go-to preference.

“But we still contend that the USTR will keep the Section 301 tariff mechanism, and only adjust the scope by expanding exclusion based on the results of the review and the state of the bilateral relationship.

“Tariff adjustments are no longer tied to trade negotiations between the US and China like during the Trump administration. The USTR’s willingness to adjust the tariff scope stems from economic and political demands at home rather than trade progress with China.”

Experts said Beijing will continue to buy from the US, though there has been no substantial dialogue at the top level on the arrangement of the trade issues after the expiry of the phase-one trade deal at the end of last year.
Qin Gang, China’s ambassador to the US, said in an interview last week that both countries should cooperate in trade as natural partners and take leading roles in driving the global economic recovery.

“For an importing economy like the US, tariffs mean higher prices for US consumers. US inflation is caused by a mixed bag of factors, and tariffs is one of them,” said Iris Pang, chief economist for Greater China at ING.

“The US may consider unwinding the tariffs to the state before the phase-one trade agreement. Dropping part of it may be of little help to ease US inflation.”

Additional reporting by Luna Sun

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