Debate is again heating up over Trump-era duties on China-made goods, with lawmakers on both sides calling for their removal amid rising inflation.
President Joe Biden indicated that he is planning to speak with China’s head of state “soon” to discuss trade relations, and is weighing possible action to remove the tariffs. “I’m in the process of making up my mind,” he told reporters while biking in his home state of Delaware last weekend.
On Wednesday, United States Trade Representative Katherine Tai testified to her agency’s performance at a meeting the Senate Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies. The subcommittee members asked why the USTR has declined to roll back the tariffs, despite their failure to curb China’s unfair trade practices.
“The China tariffs are, in my view, a significant piece of leverage—and a trade negotiator never walks away from leverage,” Tai told the committee. However, the USTR needs “to use our tools more effectively,” she said, noting that the agency plans to depart from its playbook and introduce “new tools” for “an entirely new approach.”
Sen. Jeanne Shaheen (D-N.H.) pressed Tai on the USTR’s timing on developing a new, easier-to-navigate tariff exclusion process for U.S. enterprises, which it was directed this spring to reveal by early June. “More than three months have passed, and it’s not clear what process has been established,” Shaheen said, noting that “everybody on the subcommittee has examples in their own states of how businesses are affected.”
Declining to give a date for the release of the new rules, Tai said the administration is moving forward “with a deliberativeness to ensure that any exclusion processes that we implement and have implemented are fair, transparent administrable.” The process, still under development, will aim to “give our stakeholders the opportunity to make their case for relief at a very challenging time in the world economy,” she added.
Tai acknowledged that “the public debate recently has been very, very fixated on the issue of the tariffs,” and the impact that removing them would have on people experiencing financial strain. The agency is cautious about taking any radical action it might regret when market conditions change, she said.
“Whatever we need to do for ourselves… to get through the set of challenges we are facing today, we will one day find ourselves on the other side of these challenges,” she said. It is important that the U.S. does not “undermine the need that we have to make ourselves more competitive” within a relationship that has had corrosive impacts on many areas of the nation’s economy, she added.
Following Tai’s testimony, President Trump’s former chief economic advisor Gary Cohn called the tariffs a “consumption tax” that adds “to the cost of many goods that US consumers are buying,” a view that industry groups like the Footwear Distributors and Retailers of America, the American Apparel and Footwear Association and National Retail Federation long shared.
But “some of the tariffs make sense” and should remain in place, Cohn said. “If we manufacture something here in the United States, we should protect our manufacturers,” he told CNN. National Council of Textile Organizations president and CEO Kim Glas has argued for the continuation of Section 301 tariffs on finished apparel and textiles to benefit American producers and free trade partners.
Cohn said goods that aren’t manufactured in the U.S., by contrast, should not be subject to added duties that undercut consumers. While “no one thing is going to solve inflation,” Cohn said that the U.S. government has to “do as many things as we possibly can to try and lower prices.”
“If you get rid of these tariffs, the price of those goods should go down,” he added.