Trade is an essential building block of a globally competitive economy, and it’s something government and business leaders should be paying extra attention to following the end of World Trade Month in May. Now is the time to step back, examine what we are doing to foster a healthy trade environment in our country, and chart a leadership path forward.
Now is also an opportunity to reflect on some of the biggest challenges and barriers to trade and the supply chain in the U.S. today. The trade war with China remains one of those barriers more than four years after former President Donald Trump first put tariffs in place on more than $350 billion in goods imported from China.
Since then, the tariffs have come with a heavy price tag for businesses, farmers, manufacturers, workers and families across the country. That’s because, despite claims from the previous administration, China does not pay the cost of the tariffs. Instead, they are taxes that the government charges importers right here in the U.S. to import the goods and materials they need to run their business and stay afloat. To date, the total costs Americans have paid due to the tariffs is north of $135 billion.
Making matters worse, the tariffs did little to achieve their stated goal of putting pressure on China to end its unfair trade practices. Since the signing of the Phase One Trade Deal in January 2020, China has failed to live up to its commitments outlined in the deal.
The tariffs are especially perilous as the U.S. deals with near record inflation because they, by their very nature, increase prices for American importers and consumers. Eliminating the tariffs that have been in place for over four years is a powerful tool available to the Biden administration to help combat inflation, and thankfully leaders within the administration have recently acknowledged how easing the tariffs would help bring prices down.
In a recent discussion with Bloomberg TV, for example, Secretary of the Treasury Janet Yellen acknowledged the “desirable effects” that rolling back the tariffs would have. Her comments came on the heels of Deputy National Security Advisor Daleep Singh pointing to lowering the tariffs as a way to combat inflation.
These comments are particularly noteworthy given that the Office of the United States Trade Representative announced earlier this month that it was launching a required four-year review of the tariffs on imports from China. White House Press Secretary Jen Psaki has already indicated that inflation will be a factor heading into this review, and businesses across the nation will be watching this process closely as it unfolds in the weeks ahead.
The path the Biden administration needs to follow, however, is straightforward. President Joe Biden and United States Trade Representative Katherine Tai must work to roll back the tariffs that have imposed such a heavy weight on the American economy. It is more important now that they are eliminated than at any point in the four years since they were instituted by former President Trump, otherwise they will continue to factor into rising prices for families across the country.
The tariffs were a misguided policy from the start. They imposed unnecessary costs on Americans and hampered our businesses’ ability to compete on a global scale. As policymakers and business leaders alike consider how to build a more competitive American economy, ending the trade war should be at the top of their list.
