Business groups are aggressively lobbying President Biden to undo tariffs on hundreds of billions of dollars’ worth of Chinese imports, arguing that doing so would help ease inflation.
They say that lifting those tariffs would lower the costs Americans pay for an array of common products, including clothing items, sunscreen, soap, furniture, appliances, bicycles and consumer electronics.
Biden administration officials are divided over the issue, with some disputing the notion that tariff relief would significantly impact inflation, and labor unions with close ties to the president pushing the White House to keep the tariffs in place.
Still, business lobbyists say that right now is their best chance yet to convince Biden to lessen or outright ax China tariffs first imposed by the Trump administration in 2018 and 2019.
“All the options need to be on the table to help address inflation, and this is the quickest and easiest one that we can take right now,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation.
“It’s not a cure-all, but it’s certainly going to help a lot of companies and consumers if we can reduce the cost of some of these goods, especially some of the necessities that jumped because of tariffs.”
Biden has said that he will do whatever it takes to fight inflation, including potentially revising the Trump-era tariffs. Commerce Secretary Gina Raimondo said in a televised interview with CNN on Sunday that Biden has tasked his team with analyzing whether lifting some tariffs could cool consumer prices.
“I will say it depends on what we’re talking about and what kinds of products,” Raimondo said, noting that tariffs on Chinese steel and aluminum would stay in place to protect U.S. companies. “There are other products, household goods, bicycles, et cetera, and it may make sense. And I know the president is looking at that.”
Lifting the tariffs, which apply to roughly $335 billion in Chinese goods, would boost the bottom line of some of the largest retailers, manufacturers, tech giants and other U.S. companies that pay tariffs of up to 25 percent to import affected goods from China.
Corporate lobbying groups are focusing their messaging around the costs that are passed on to consumers, often citing a Congressional Budget Office study estimating that Section 301 tariffs cost the average American household more than $1,200 in real income in 2020 and hiked consumer prices by 0.5 percent.
“Not only are these taxes highly regressive, hitting lower-income Americans hardest on basic needs, but they can be removed with the stroke of a pen,” said Steve Lamar, president of the American Apparel and Footwear Association.
Business groups also cite a study from the pro-free trade Peterson Institute for International Economics finding that reducing tariffs on all imported goods could ease inflation by 1.3 percent. The same study found that lifting tariffs on just Chinese imports would only lower inflation by less than 0.3 percent in the near term, but the total impact could reach 1 percent in the long run.
“The tariffs absolutely contribute to today’s high cost of living,” said John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce. “They are taxes paid by Americans, and most of them lack any strategic rationale.”
The White House is frantically searching for ways to slow down 40-year-high inflation, which rose 8.3 percent in the past 12 months ending in April due to supply shocks stemming from pandemic slowdowns.
But U.S. Trade Representative Katherine Tai has cast doubt on the effectiveness of tariff relief to fight inflation, calling the Peterson Institute study “something between fiction and an interesting academic exercise” last month.
Tai, who doesn’t want to lose leverage in trade negotiations with China by lifting tariffs, has diverged from other Biden officials, including Treasury Secretary Janet Yellen, who said last month that some of the China tariffs “imposed more harm on consumers and businesses.”
“If we’re going to take on an issue like inflation, and given the seriousness that it requires, then our approach to tools for mitigating and addressing that inflation need to respect that it is a more complicated issue than just tariffs at the border,” Tai said during a Washington International Trade Association event Monday.
Labor unions with close ties to Biden are another obstacle to tariff changes. Several unions filed a comment with Tai’s office Monday calling for the China tariffs to be extended, citing U.S. jobs lost to the Chinese government’s trade practices.
“Nothing has changed that would merit unilaterally lifting the tariffs,” United Steelworkers President Thomas Conway wrote on behalf of the Labor Advisory Committee for Trade Negotiations and Trade Policy, a coalition of labor unions that advises the executive branch on trade matters. “If anything, President Xi and the [Chinese Communist Party] have only doubled down on their strategy and approach.”
Conway noted in the letter that the advisory committee’s members, which include the International Brotherhood of Teamsters, United Auto Workers and Service Employees International Union, are “united in the view” that the China tariffs should be extended.
Tai is taking comments from corporations and other impacted parties as part of a four-year review of the China tariffs that will be completed in the coming months.
Business groups are hopeful that Biden’s decision on Monday to waive tariffs on solar panel imports from Southeast Asia is a signal that the White House agrees tariffs can damage key industries.
Corporate lobbyists are pushing for widespread reductions or lifting of China tariffs, but they would settle for a measure to make it easier for U.S. companies to be exempted from tariffs as a consolation prize.
“The expiration of critical exclusions granted to protect domestic manufacturing competitiveness has driven up input costs, making U.S.-manufactured products more expensive than those of foreign competitors, hurting manufacturers and workers in the United States,” the National Association of Manufacturers wrote in a recent letter to congressional leaders.