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Containers are stacked at the Port of Los Angeles in California on July 7. US President Joe Biden is said to be reviewing some of the tariffs first imposed on a range of Chinese goods, from steel to clothing, four years ago. Photo: EPA-EFE
Opinion
Christopher Tang
Christopher Tang

Biden still hasn’t lifted tariffs on Chinese goods – what is taking so long?

  • Biden promised to review the trade war with China at the start of his presidency, but 18 months on and with inflation surging, he has yet to make a decision
  • Some in Biden’s camp want China to commit to buying more US goods before lifting the tariffs but, in the meantime, they are hurting American consumers
Christopher Tang
Christopher Tang
Why you can trust SCMP
US President Joe Biden and President Xi Jinping talked for more than two hours last Thursday. It was to be expected that both leaders reiterated their current positions on Taiwan and the Ukraine crisis, resulting in an impasse.
But many were surprised to see that Biden did not discuss his plan to lift some tariffs on Chinese imports as a way to curb 40-year-high inflation levels in the US. The pieces are all in place to end these costly tariffs. What is he waiting for?
The time has come for Biden to make a decision on the tariffs for the sake of American consumers and for himself. If not, his dwindling 40 per cent approval rating, as of late July, will continue to fall. His White House staff will become demoralised by his indecisiveness. Worst of all, his hopes for a second term will be dashed.

During the 2020 presidential election, Biden stated that, if elected, he would scrap the tariffs on Chinese imports because manufacturing had gone into a recession, the agriculture sector had lost billions of dollars that taxpayers had to compensate, and the unilateral approach of levying tariffs on China had not worked.

US President Joe Biden delivers comments on rising inflation in the US from Washington on July 28. Photo: Bloomberg

Biden’s arguments for ending these tariffs were logically sound in 2020, but he has not acted on them since becoming president in January 2021. What has changed? Nothing. In fact, many events have added weight to his arguments.

Since Biden’s election, the trade war against China has proven futile at best and disastrous at worst. The US-China Business Council urged the Biden administration in late 2021 to dial back tariffs, but Biden responded in January this year that he was not ready to do so.
Despite the tariffs, the US trade deficit with China rose 25 per cent in 2021 over a year earlier, to US$396.6 billion. Meanwhile, to offset the increased cost of importing products from China, US companies have been forced to raise their prices, hurting American consumers.
With inflation above 8 per cent since March, eliminating these tariffs is an important step; indeed, it could bring down inflation by 1.3 percentage points. On July 16, US Treasury Secretary Janet Yellen acknowledged that many of the tariffs were not strategic and had hurt US consumers. She confirmed she was pressing Biden to make reductions.

Such renewed attention on the trade war raised expectations that Biden would seize the opportunity to dial back tariffs during his talk with Xi last week. But it did not happen. Why?

03:13

Xi warns Biden that US ‘playing with fire’ as tensions soar over Pelosi’s proposed Taiwan visit

Xi warns Biden that US ‘playing with fire’ as tensions soar over Pelosi’s proposed Taiwan visit
Despite the pressure to reduce these tariffs, there is an opposition camp within the Biden administration who wants him to leverage the tariffs to force China to commit to importing more goods from the US. Labour unions and progressives within the Democratic Party are also united in opposing cuts in these tariffs.
China failed to meet its purchasing targets under the phase one trade agreement signed by Washington and Beijing in January 2020, but this ought to have been expected because most products are already made in China. Moreover, China is banned from purchasing hi-tech products. Besides agricultural goods, then, what should China buy from the US?

To date, the Biden administration has not been able identify ways to extract strategic value from China by leveraging these tariffs. At the same time, keeping them is hurting American consumers and the economy.

If one examines the trade-off, scrapping some tariffs for basic goods such as toys and clothes to immediately relieve inflationary pressures is a no-brainer. It would give Biden more time to develop a better strategy for negotiating with China.

Biden has acknowledged that any damage done to the economy cannot be fixed soon enough. Yet, he has had more than 18 months to mull over his pledge to scrap tariffs on Chinese imports, and has fixed little.

Decisiveness is an essential quality for all leaders. Indecisiveness can be a sign of weakness, and a weak leader can put everyone at risk, including himself.

Christopher S. Tang is a distinguished professor at the UCLA Anderson School of Management

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