Biden weighs in on easing some of Trump's China tariffs

President Biden, in an Oval Office meeting last week with key members of his cabinet, indicated that he was leaning towards removing certain products from the Trump administration’s China tariff list, sources told Reuters. Axios of people close to the case.

Why is this important: With inflation at 8.6%, its highest level in 40 years, Biden and his top officials are desperate to lower prices, even if it makes them look weak vis-a-vis China.

  • Inflation is eating away at the purchasing power of low-income Americans and eroding the political fortunes of Democrats ahead of the midterm elections. While the Federal Reserve is the nation’s chief inflation firefighter, tariffs that now cover $350 billion in goods imported from China are one area where Biden can act unilaterally to provide relief to American consumers.
  • But Biden’s plans to exempt certain products covered by Trump’s Section 301 tariffs risk aggravating the labor movement.
  • Driving the news: Biden is scheduled to address the AFL-CIO Constitutional Convention in Philadelphia today, with remarks aimed at celebrating their partnership.
  • But in private conversations with administration officials, labor representatives warned the White House against easing tariffs.

What we mean: Biden is leaning toward ordering the U.S. Trade Representative’s office to initiate a formal “exclusion process” to determine whether certain consumer items, such as bicycles, should be exempt from Section 301 tariffs. include large industrial items, such as steel and aluminum, in the process.

  • Biden offered some insight into that thinking last Tuesday during a meeting with key Cabinet officials, according to people familiar with the discussions.
  • A potential announcement is expected as early as this month.
  • “No decision has been made,” a White House spokesman said. “The President is talking with his team to ensure that tariffs are aligned with our economic and strategic priorities, such as safeguarding the interests of workers and critical industries, promoting our national security and not increasing costs unnecessarily. for Americans.”

The big picture: The Labor movement informed Biden last week that they expect him to keep all of Trump’s tariffs in place, writing that “our government must act in the national interest to strengthen our economy for the future.” .

  • For most of his presidency, Biden has been reluctant to let daylight come between him and the labor movement, which forms the backbone of his political coalition.
  • The extent of union anger likely depends on the number of items Biden exempts and the total dollar amount.
  • Some labor officials were frustrated by Biden’s decision last week to use his emergency powers to waive any potential trade sanctions on solar developers for importing panels from Southeast Asia.

Between the lines: The overall impact of removing all Trump tariffs on imports from China, one study found, could lower the consumer price index (CPI) by just 0.26 percentage points.

  • That has fueled a fierce internal debate, pitting economic officials against other key administration officials, like USTR Katherine Tai, who want to retain influence over China.

Rollback: For several months, officials privately debated the political and economic merits of waiving some of Trump’s tariffs, with Biden telling reporters in Japan in late May that he was “considering” rescinding some of them.

  • “We didn’t impose any of those tariffs,” he said. “They were imposed by the previous administration, and they are under consideration.”

The bottom line: White House officials are depressed and resigned to their prospects for significant price declines before November. Biden is deeply frustrated with the addresses offered by his team at exorbitant gas prices.

  • He recently questioned the interest in traveling to Iowa to promote biofuels to reduce gas prices, as reported by The Washington Post, summoning his chief of staff, Ron Klain, in the oval office.

By cardgo

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