The American Action Forum estimates that tariffs on Chinese imports cost consumers about $50 billion a year.
Maybe inflation ends up bringing something good after all. President Joe Biden is about to remove at least some of the tariffs his predecessor placed on some $350 billion of goods the United States imports from China. The Administration considers him to harm consumers. A better justification would be that they failed to change China’s ways to begin with.
Biden did not design the tariffs, they were the work of Donald Trump, who sought to punish unfair practices such as abuses of Chinese intellectual property, but he has made a mistake by leaving them in place all this time. China originally agreed to buy an additional $200 billion worth of US goods over two years and make substantial changes to its policy. That has not happened. China has not purchased any of those additional US imports, according to the Peterson Institute.
Inflation, at its highest point in the last 40 years, has forced us to rethink the situation. The American Action Forum estimates that tariffs on items like toys, paint and soap cost consumers about $50 billion a year. For this reason, some members of the Biden team, including the president, are inclined to eliminate some of those tariffs this week, according to the Wall Street Journal. Peterson estimates that the competitive impact of the elimination of all taxes could lead to a decrease of one percentage point in the consumer price index, which in May rose 8.6% year-on-year.
Unforeseen events had already made the tariffs irrelevant. Due to the pandemic and increased consumer spending, the US trade deficit with the People’s Republic increased 15% from 2020 to 2021, and has increased again so far this year. Trade levies, however, still have political value, as China is one of the few targets on which the two parties in Washington agree. The Biden administration is considering raising other import taxes on industrial machinery, and high-tech items could be next, the Wall Street Journal reported.
Biden risks being seen as soft on China, especially by the unions, whom he courted to become president. And state subsidies and other unfair business practices are a problem with the People’s Republic. But the tariff attacks are not hitting the target. Inflation does nothing more than give the coup de grâce to an idea that, in any case, had little travel.
