U.S. Trade Representative Katherine Tai argued against lifting tariffs on hundreds of billions of dollars’ worth of Chinese goods Wednesday, saying it would not do much to ease inflation and would remove key leverage she has in negotiations with China.
President Joe Biden is under pressure to remove the more than $300 billion worth of Section 301 tariffs on Chinese imports imposed by the Trump administration to curb growing inflation. Tai told a Senate Appropriations subcommittee, however, that the levies can be used to the United States' advantage.
“At USTR we are responsible for the formulation of American trade policy and guiding the U.S. economy through challenges and opportunities that are presented today to set up the American economy for success in the future,” Tai said. “The China tariffs are, in my view, a significant piece of leverage, and a trade negotiator never walks away from leverage.”
Tai said it’s still unclear how she would use that leverage, but she stressed it will be useful in making the U.S. more competitive with China on the global stage.
That puts Tai at odds with another Biden cabinet member, Treasury Secretary Janet Yellen, who argued earlier this month that the tariffs “weren’t designed to serve our strategic interests.”
Yellen, testifying before the House Ways and Means Committee, said that while China is guilty of “unfair trade practices,” it is primarily U.S. businesses that are hurt by the tariffs that make imported products more expensive.
But Tai, along with two GOP senators, said that removing the tariffs would not have a significant impact on inflation.
The tariffs – which Tai called defensive measures against China – together with other trade tools can make the U.S. more competitive in the medium and long term. But she also stressed that “with respect to short-term challenges, there’s a limit to what we can do with respect to especially inflation.”
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Major farm groups sent a letter to Tai in May, urging the Biden administration to withdraw Section 301 tariffs on China as well as Section 232 tariffs on steel and aluminum imports from China and elsewhere.
When asked Tuesday by reporters if he would speak to Chinese President Xi Jinping before any decision on the China tariffs, Biden confirmed that he will indeed meet with Xi.
“With respect to China tariffs and next steps on actions, they are pending with (Biden) right now,” Tai said at the hearing Wednesday, adding that “these issues are under consideration for a decision as we speak.”
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