Exclusive: US rethinks Chinese tariff measures following Taiwan response – sources

WASHINGTON, Aug 10 (Reuters) – China’s war games around Taiwan have led Biden administration officials to recalibrate their thinking on whether to scrap some tariffs or potentially impose others on Beijing , putting those options aside for now, according to sources familiar with the deliberations.

President Joe Biden’s team has been struggling for months with various ways to ease the costs of duties imposed on Chinese imports during his predecessor Donald Trump’s tenure as they try to rein in soaring inflation .

He envisioned a combination of eliminating some tariffs, launching a new “Section 301” investigation into potential areas for additional tariffs, and expanding a list of tariff exclusions to help U.S. businesses that cannot get some supplies from China.

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Biden has not made a decision on the issue and all options remain on the table, the White House said.

The tariffs make Chinese imports more expensive for American companies, which, in turn, makes the products more expensive for consumers. Lowering inflation is a major goal for Biden, a Democrat, ahead of November’s midterm elections, which could shift control of one or both houses of Congress to Republicans.

But Beijing’s response to U.S. House of Representatives Speaker Nancy Pelosi’s visit to Taiwan last week has sparked a new reckoning from administration officials, who are keen not to doing anything that could be seen by China as escalation while also seeking to avoid being seen as backing down in the face of aggression from the communist country.

For days, the Chinese military participated in ballistic missile launches and mock attacks on the self-governing island of Taiwan that China claims as its own. Read more

“I think Taiwan has changed everything,” said a source familiar with the latest developments in the process, details of which have not previously been released.

“The President had not made a decision before the events in the Taiwan Strait and still has not made a decision, period. Nothing has been set aside or put on hold, and all options remain on the table,” White House spokesman Saloni Sharma said. “The only person who will make the decision is the president – and he will do it based on what is in our interest.”

When asked why a decision was taking so long, Commerce Secretary Gina Raimondo referred to the complicated geopolitical situation.

“After President Pelosi’s visit to Taiwan, it’s especially complicated. So the president is weighing his options. He’s very careful. He wants to make sure we don’t do anything that could harm the American workforce. and American workers,” she said in an interview with Bloomberg TV.

LIST OF EXCLUSIONS

With the strongest measures regarding tariff relief and tariff escalation largely on the back burner for now, the focus is on the so-called list of exclusions.

The Trump administration had approved tariff exclusions for more than 2,200 import categories, including many critical industrial components and chemicals, but those expired when Biden took office in January 2021. The U.S. Representative to the Commerce, Katherine Tai, reinstated just 352. Industry groups and more than 140 U.S. lawmakers have urged her to dramatically increase the numbers.

The Biden administration’s next steps could significantly impact hundreds of billions of dollars of trade between the world’s two largest economies.

U.S. industries, from consumer electronics and retailers to autos and aerospace, have called for Biden to scrap tariffs of up to 25% as they battle rising costs and tight supplies .

The tariffs were imposed in 2018 and 2019 by Trump on thousands of Chinese imports valued then at $370 billion to pressure China over its alleged theft of American intellectual property.

Some senior administration officials, including Treasury Secretary Janet Yellen, had argued that the duties were imposed on “non-strategic” consumer goods that had unnecessarily increased costs for consumers and businesses, and that their removal could help dampen runaway inflation. Tai argued that the tariffs were “significant leverage” that should be used to pressure China to change its behavior. Read more

MULTIPLE FACTORS

Multiple factors, in addition to China’s response to Taiwan, complicated the administration’s deliberations.

As U.S. officials considered getting rid of some of the tariffs, they asked for reciprocal rollbacks from Beijing and were rebuffed, two sources said.

One of the sources, who said the unilateral removal of some US tariffs on Chinese imports had been suspended, said it was done in part because China had shown no willingness to take action. reciprocal or to respect its “phase 1” commercial commitments. .

A spokesman for the Chinese Embassy in Washington said economic and trade relations between the two countries faced “serious” challenges.

“(Pelosi’s) visit has undermined the political foundations of China-US relations and will inevitably lead to a major disruption of exchanges and cooperation between the two sides,” Liu Pengyu said in an email to Reuters.

The trade deal, struck in late 2019 with the Trump administration, required China to increase its purchases of U.S. agricultural and manufactured goods, energy and services by $200 billion in 2020 and 2021 from 2017 levels. China remained well short of those commitments, which included a two-year increase of $77.7 billion in imports of American manufactured goods, including aircraft, machinery, vehicles and pharmaceuticals.

The Peterson Institute for International Economics estimates that China has not actually purchased any of the additional goods it promised. Beijing blamed the COVID-19 pandemic, which began just as the deal was signed in January 2020.

The U.S. Trade Representative’s office is currently in the midst of a four-year legal review of Trump’s tariffs, which could take a few more months. Final public comments on whether to keep them in place are expected by August 23.

United Steelworkers-Led Labor Groups urged The USTR will keep tariffs on Chinese goods in place to help “level the playing field” for workers in the United States and reduce US reliance on Chinese suppliers.

Biden worried about the tariff reduction partly because of labor, which is a key constituency for him, and because of China’s inability to buy the products it had agreed to. to buy, according to the first source. The White House declined to give a timeline for when a final decision will be made.

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Reporting by Jeff Mason and David Lawder; edited by Heather Timmons and Grant McCool

Our standards: The Thomson Reuters Trust Principles.

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