Wednesday, June 29, 2022

Ten Reasons President Biden Should Not Lift Tariffs on Imports from China

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President Biden is now considering lifting tariffs on some imports from China. It’s an idea that’s been floating out there for awhile, pushed by special interest groups that haven’t liked them since the Trump administration put them in place starting in 2018.

But Biden shouldn’t lift the tariffs! It would be a huge mistake, as we’ve outlined several times before. This time, though, we’ve come up with the top 10 reasons why Biden should keep them in place.

1. Lifting Tariffs Will Do Nothing to Help Inflation

There’s no doubt that inflation is driving up prices for everything from gas to groceries. Nobody likes it, and importers have actively pushed the argument that lifting tariffs will help bring prices down.

Only it totally won’t! A study from the Peterson Institute for International Economics — a group that really, really dislikes tariffs — found that lifting the tariffs will cut the Consumer Price Index by 0.26%. Yes, you read that right: Less than one-third of a percentage point. These are the folks who advocate lifting tariffs.

Inflation is being driven by a whole host of factors. The tariffs were put in place four years ago. They didn’t cause inflation then, and lifting them won’t fix things now. But…

2. Lifting Tariffs Will Give the CCP an Undeserved Win

Lost in this current tariff debate is the whole reason why the Trump administration issued them in the first place: China’s lengthy history of trade cheating.

For decades, the Chinese Communist Party (CCP) has led an effort to dominate global industries through predatory trade practices, using everything from massive subsidies and state-owned enterprises to intellectual property theft and forced technology transfers to lax environmental and labor practices. Trump’s tariffs aimed to level the playing field for American manufactures and workers and get China to the table to make changes.

Chinese leaders did come to the table — how about that! — and the 2020 “Phase 1” trade deal between the U.S. and China was supposed to be the start of reforms. But China has failed to meet its commitments in that deal, and in many ways, its practices have only gotten worse (see: forced labor).

Lifting the tariffs now would reward the CCP for its continued bad behavior.

3. Lifting Tariffs Will Make it Harder to Rebuild Critical Production and Supply Chains

The tariffs aren’t driving inflation, but you know something that is? Broken global supply chains.

Higher shipping costs, port congestion, and factory shutdowns in China are among the things driving up prices for consumers. This isn’t a problem that can be solved overnight, but reshoring production and supply chains — especially for critical products like semiconductors — will help alleviate things in the long-term.

By lifting tariffs, corporations will be incentivized to keep manufacturing in China, or even move more of it there. That means all of these problems will just be made worse.

4. Lifting Tariffs Will Weaken National Security

The Atlantic just came out with a piece calling weak U.S. supply chains “the single greatest challenge” for our national defense. That’s a case we’ve been making since our founding; the 2013 report “Remaking American Security” highlighted the many ways the U.S. military is dependent on imports, including everything from batteries to components for fighter jets.

The magazine points out that the “United States has the capacity to mobilize. The question is whether we can substitute a culture of short-term profits and politics for a long-term national defense.” That starts by not giving our top geopolitical adversary an undeserved win — and putting the policy in place to actually encourage reshoring.

5. Lifting Tariffs Will Make It Harder to Respond in a Future Crisis

Unfortunately, Americans know first hand the dangers of not being able to make the things we need thanks to the COVID-19 pandemic. The United States was almost entirely dependent on imports from China for things like face masks, ventilators, gloves, and hospital gowns.

American manufacturers responded by building factories from scratch. Nearly three years later, they are facing an onslaught of cheap imports from China. Many of these imports are already exempt from tariffs, and lifting the tariffs that remain will give importers an even greater advantage on American workers and manufacturers, who worked so hard to keep Americans safe during the darkest days of the pandemic.

6. Lifting Tariffs Will Undermine American Workers

Last week, labor leaders wrote to President Biden urging him to keep the tariffs in place. United Steelworkers President Tom Conway, writing on behalf of the Labor Advisory Committee on Trade Policy and Negotiations, noted that “China’s non-market and state-led approach has undermined U.S.-based producers and employment.”

The tariffs “support the overall level of retaliation that is appropriate to respond to China’s unfair, predatory, and protectionist trade policies,” Conway wrote. “Workers in public and service sector jobs, as well as in manufacturing, have seen their jobs put at risk as a result of the impact of the CCP’s policies on producers in their communities who, when injury occurs, often reduce or shutter operations, resulting in untold damage to the tax base and provision of community services.”

Simply put: Lifting the tariffs will harm U.S. manufacturers and could very well lead to the loss of good union jobs and gutting communities.

7. Lifting Tariffs Will Remove a Key Negotiating Tool

You know who wants the tariffs removed? China.

The Chinese embassy in D.C. has lobbied Congress to oppose several pieces of legislation designed to make the U.S. more competitive globally. Not surprisingly, China has long been opposed to the tariffs specifically. These things are a real issue for the CCP.

That means the tariffs are a key negotiating tool, and it would be a mistake to voluntarily take them off the table before China actually does anything to address the litany of issues that caused them to be put in place to begin with. U.S. Trade Representative Katherine Tai has said the same thing, with the Washington Post noting that she “does not want to surrender a bargaining chip without getting something in return.”

8. Lifting Tariffs Isn’t Popular Among the American Public

If the White House thinks that lifting tariffs will help politically, they may want to take a look at this poll from the nonpartisan firm Morning Consult, which found that 73% of American voters support using trade enforcement mechanisms like tariffs to counter China and defend American industries. When asked about the tariffs currently at stake in this debate, 71% of voters were supportive.

An overwhelming of Americans get it. Now’s not the time to give the CCP an edge.

9. Lifting Tariffs Will Give Chinese Manufacturers an Unfair Advantage

As we noted in No. 2, the CCP already uses an array of unfair trade practices in its quest to dominate global industries. That allows Chinese manufacturers (many of which are state-owned) to sell their products on the U.S. market at rock bottom prices, often below fair market value.

But American manufacturers operate in a free market and abide by much stronger labor and environmental standards. Tariffs level the playing field for these companies and their workers, putting them in a better position to compete. By lifting tariffs, the U.S. will essentially hand an unfair advantage to Chinese manufacturers over our own.

10. Lifting Tariffs Now Will Undermine Future Efforts

President Biden likes to describe the current relationship between the U.S. and China as a competition to win the 21st century. There are going to be a whole lot of battles between the two nations over the next decade — proper enforcement of the Uyghur Forced Labor Prevention Act is the next big one on the agenda — and China is very good at playing the long game.

If the CCP knows that when things a little tough, the U.S. will simply fold — especially in cases like this, when folding won’t even accomplish anything — it won’t be motivated to address some of its bad practices. Removing tariffs now will make it harder for future presidents to make progress and ensure the United States does indeed win the the 21st century.

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