American consumers are in a pinch as prices of everything from gas to eggs to cars are rising. There are countless reasons for inflation, which hit a 40-year high in June.President Joe Bydenis reported to be considering raising tariffs on some Chinese products to reduce them.
Byden, who called inflation a "worry for our existence," in May evaluated how best his administration could advance China's existing tariffs. He said he was doing it. The up to 25% tariffthat formerPresident Donald Trumpslammed on China as part of the trade war covers hundreds of billions of dollars worth of imports from China.
In the mid-term elections in November, prices rose to the heads of U.S. voters, with China's Deputy Prime Minister Liu Wa on July 5 andU.S. Treasury Secretary Janet Jellen. Speculation has increased that virtual negotiations will impose customs duties. It may be released soon.
"Because high inflation has become a politically toxic problem, theByden administrationwill take all policy steps within that range to contain the rise in prices. I'm clearly enthusiastic about that, "Eswar Prasad, a professor of economic and trade policy at Cornell University and a former head of the IMF's China division. "The need to do whatever is possible to curb inflation is probably overturning concerns about the political blow from the perception of softening US policy towards China," he adds.
But Biden actually raises prices, which will help American consumers. Here's what you need to know:
Will Byden actually raise the price?
The White House said on Tuesday that it was still considering that option, and the issue seems to be split. Some cuts could be justified this month, and some tariffs "will be paid by Americans rather than Chinese, hurt American consumers and businesses," Jellen said this month. rice field.
However, US trade representative Catherine Thailand told the Senate Subcommittee in late June that it was important to protect US trade interests. "China's tariffs are ... an important leverage, and trade negotiators never leave the leverage," she said.
Read more:Amazing things that can help mitigate inflation
US trade According toReuters
, the official's office is 400 to maintain tariffs on Chinese products, including 24 labor union committees, as of the end of Tuesday. Demand will continue to impose tariffs for fear of unemployment due to increased manufacturing outsourcing to China, "said Dougbury, a non-profit US-China Business Council employee representing about 200 companies that do business and trade with China." I am saying.
But he added that there is evidence that tariffs actually caused domestic unemployment in some industries. "Weak demand for Chinese imports means less economic activity generated by those imports. Fewer truck drivers, salespeople and accountants, and US companies do business. Local governments will have less tax revenue, "he says.
Even if the government raises tariffs, it may not be a major change.
Former White House Trade Negotiator Crete Willems told CNBC'sSquawk Box Asiaon Wednesday that some Chinese tariff increases were"modest". He said it's likely —In the short term, it's probably $ 10 billion out of the $ 360 billion currently imposed on China.
Many US industry groups are not fans of customs
Eliminating all customs has a modest effect and prices for many products Lower it, says David Dollar. Senior Fellow of the Brookings Institute. "Some of them work through the supply chain because US companies import more parts from China and eliminate tariffs so that the chain works more smoothly."
But Customs cuts are likely to focus on consumer goods, such as electronic devices, where "price cuts are most visible to consumers," Cornell's Prasad said. But "it's not clear that tariff cuts will turn to lower prices when consumer demand is strong," he says.
According to a JunePeterson Institute for International Economics survey, widespread trade liberalization can save American households an average of $ 7,97. However, trade representative Thailand criticized the study as "something during fiction or interestingacademic exercises", and Jellen said that Cut was a"universal drug" to mitigate high inflation. I warned that it was not.
This means that potential tariff cuts may not give the Byden administration the desired political boost.
"Reducing tariffs can have a limited and delayed impact on inflation at best, and the government's inability to control inflation with the freedom to use very limited policy tools. There is a risk of "embossing". "Obviously, reducing tariffs will benefit both countries, but reducing tariffs without concessions or promises from China could bring very high political costs to the Biden administration compared to economic benefits. "There is."
Still, Barry states that members of the US-China Business Council oppose tariffs "because they do more harm than good." Some companies have "paid hundreds of millions of dollars in additional fees to the US Treasury," he said, so raising prices makes sense for US companies. He cites one of the last loud speaker makers in the United States. He complains that his products are no longer competitive, as some components imported from China are subject to a 25% tariff.
Barry states:
Amy Gunia (amy.gunia@time.com)