According to the Wall Street Journal, the Biden administration will soon announce tariff exemptions for some Chinese exports to the United States. This is the first time the Biden administration has explicitly considered Trump-era tariff reductions on Chinese goods, and the change is reportedly due to domestic inflationary pressure. Washington’s tariff waivers would be a rare positive sign at a time of increased political interaction between China and the US, but the limited nature of such a signal should also serve as a reminder for China to prepare for future uncertainties in the economic system. global.
Indeed, when the Biden administration signaled through press reports and official statements months ago that it would exempt certain Chinese goods from tariffs, it was a tacit admission that the United States had lost the years-long trade war with China. Since the Trump administration, the US government has added additional tariffs on Chinese goods citing the large trade deficit, structural barriers against US businesses and low purchases of US goods by China as reasons. In recent years, however, more evidence has emerged that the trade war is bad for the United States itself.
China has not changed its trade behavior because of the US measures. The trade war has not changed the structural fact that China and the United States have a huge trade deficit and mutual trade dependency. Data showed the US goods trade deficit widened by 18.3 percent to a record $1.1 trillion for all of 2021, while China remained the largest deficit country with a trade deficit of $355 .3 billion, which represents 41 percent of the total. Although the deficit was lower than the record of 2018, it was 14.5% higher than in 2020.
Meanwhile, the trade war does not “impose costs on China.” According to a 2021 Moody’s study, more than 90 percent of the tariff costs in a trade war between China and the United States will be borne by the United States itself. Matthew R. Shay, president of the National Retail Federation, noted that U.S. Customs and Border Protection (CBP) has collected nearly $136.5 billion of US importers since the tariffs took effect in 2018, which has also significantly increased costs for US consumers. The attempt to “punish China” turned out to be punishing the United States itself .
So, with inflation continuing high, business interests constantly called on the Biden administration to reconsider the tariffs. Now the administration will reportedly provide partial relief. The Biden administration sees lifting some tariffs primarily as a way to respond to domestic dissatisfaction with the current high prices, especially with the pressure of the midterm elections at the end of the year. According to A study According to the Peterson Institute for International Economics (PIIE), a Washington-based think tank, if the Biden administration takes a series of steps to reduce or eliminate several additional tariffs currently in place, it could eventually lower the US consumer price index. US by 1.3 percent . Industry representatives have also been arguing about the benefits of reducing or eliminating high tariffs on China, prompting Biden to actively consider some tariff cuts to try to show that the White House is focused on tackling inflation.
However, the “tariff exemption” reported in the news is not a full tariff reduction for China, indicating that the Biden administration is still hesitant on the tariff issue and anxious not to be interpreted as “showing weakness to China.” In the current political climate in Washington, even a modest change in China policy is likely to meet strong skepticism from Republicans and Democrats alike, and tariffs are no exception. So the measure, for now, is best interpreted as a political action on an internal problem.
Biden and the Democrats have shown no intention of making big concessions to China on trade. By contrast, a group of hawks from China, led by the US trade representative. katherine tai, are pushing for greater scrutiny of economic and trade issues with China. As a result, the reported tariff waivers, if made official, are simply the end of some of Biden’s previous policies, rather than a fundamental change in his approach to China.
Faced with complex calculations by the United States on adjusting some of its tariff policies against China, Beijing should continue to rely on promoting the development of the world economy, building more stable economic and trade ties with other countries, and gradually expanding its business in other markets. economic. Currently, China’s trade with countries along the Belt and Road is in a stage of rapid growth. Data show that between 2015 and 2021, China’s goods trade with countries along the Belt and Road was worth about $9.17 trillion, with $1.8 trillion in 2021 alone, accounting for about 29 .7 percent of China’s total trade in goods. China’s cooperation with countries along the Belt and Road in investment, infrastructure construction, new energy development and poverty reduction is also deepening. Meanwhile, the Regional Comprehensive Economic Partnership (RCEP), which officially came into effect this year, will greatly promote economic ties across the Asia-Pacific region.
When the United States, still stuck in its internal political fight, refuses to cooperate more deeply with Beijing, China should more actively seek the international market. At a time when the current global economy is facing multiple challenges, China should firmly support the development of the global economy and trade communication and coordination, with a more active attitude to respond to confrontational narratives emerging from Washington.