Half measures called too little on tariff cuts

While a small portion of the tariffs that the United States has imposed on Chinese goods could be removed soon, that represents just the tip of the iceberg, according to a media report that adds to speculation that the White House will ease up on measures judged as hurting US consumers and businesses.

US President Joe Biden could remove tariffs on just $10 billion worth of Chinese goods, according to the news website Politico. Biden's predecessor, Donald Trump, imposed tariffs on about $370 billion worth of imports from China, starting in 2018.

Experts have continued to express concerns over the impact of the tariffs on the US economy, which is battling soaring inflation.

The Politico report suggesting the White House will give ground, at least initially on the $10 billion worth of tariffs, coincides with the conclusion on Tuesday of the first phase of a mandatory four-year review of the Trump measures by the Office of the US Trade Representative, or USTR.

The White House is likely to announce its tariff decision this month, according to three industry officials and former federal officials with knowledge of the administration's plans, Politico said in the report.

The administration has been trying to balance the task of fighting inflation, which could be eased with the removal of tariffs, with the realities of opposition by labor unions and Washington politicians pushing for a hard line on China.

"These tariffs punished the American people, especially lower-income Americans, and did nothing to return jobs to the United States," Stephen Orlins, president of the National Committee on United States-China Relations, told China Daily. "The tariffs did force some manufacturers to leave China and go to third countries. China's loss was not America's gain, and the additional costs of these moves were often paid by the consumer.

Sourabh Gupta, a senior fellow at the Institute for China-America Studies, told China Daily: "The Biden team continues to lack an internal consensus on the tariff issue and is hence adopting a 'split the difference' approach by pulling back on a subset of tariffs. This is a far-from-satisfactory approach."

In a social media post on Tuesday, Bill Bishop, author of the Sinocism newsletter and co-founder of CBS MarketWatch, wrote: "Just $10 billion worth of Chinese goods… what is the point? A milquetoast compromise that just makes Biden look weak and indecisive, and it took them 17 months to argue to this."

Douglas H. Paal, a distinguished fellow of the Asia Program at the Carnegie Endowment for International Peace, told China Daily: "Common sense argues that the US is not acquiring leverage against China by continuing tariffs that largely raise prices for American industry and consumers. That, plus inflation, is a strong argument."

More efforts expected

Doug Barry, vice-president of communications and publications for the US-China Business Council, told China Daily that "businesses would like to see all Trump-era tariffs removed. The tariffs haven't worked as contemplated and have been costly for US businesses and consumers".

"We hope that both governments will redouble efforts to negotiate solutions to other trade and investment problems and concerns. There is much to discuss," Barry said.

Suzanne Clark, the president and chief executive of the US Chamber of Commerce, wrote on Friday in an opinion article in Barron's: "The case for tariff relief is strong: It can help counter soaring inflation, provide relief to families struggling with high prices, and shore up the competitiveness of US manufacturers. What are we waiting for?"

The US tariff approach is expected to include three parts, according to Politico.

First, a narrow set would be lifted, likely on consumer goods such as bicycles. Second, the administration is expected to announce that the USTR will open a new exclusion process for companies to receive exemptions from the tariffs.

The USTR earlier this year awarded exemptions on more than 350 types of Chinese imports, but companies and pro-free trade lawmakers have pushed the agency to award more. Third, the administration will start a new investigation under Section 301 of the 1974 Trade Act.

Trump imposed the duties in four tranches over a year and a half. He set a 25 percent tariff on an initial $34 billion worth of Chinese goods on July 6, 2018, and went after another $16 billion with the same rate on Aug 23, 2018.

In the following months, Trump responded to China's reciprocation to his tariffs by imposing a 10 percent duty (later raised to 25 percent) on another $200 billion worth of Chinese goods. The next year, Trump hit an additional $120 billion worth of imports with a 7.5 percent tariff. Tariffs proposed on another large group of Chinese goods were never imposed.

By June 8, the US had collected more than $140 billion worth of duties on Chinese goods as a result of Trump's actions, raising costs for businesses and consumers, Politico reported.

The USTR set two deadlines for tariff extension requests: July 5 and Aug 22. As of late Monday, the USTR had received 263 submissions for the request period ending Tuesday, and 64 for the period ending Aug 22, according to Politico.

Gupta sees the tariff standoff as a pivotal moment in Sino-US relations. "The imposition of the tariffs continues to have an outsized political significance. And … their impending part removal, too, is a politically salient moment in the US-China bilateral relationship," he said.