Almost four years after the previous Donald Trump administration slapped 25 percent tariffs on $34 billion of Chinese imports, the first shot in the trade war it initiated against China, US President Joe Biden has hinted that he may lift some of the tariffs his predecessor imposed on Chinese goods. "I'm in the process of making up my mind," he told reporters on Saturday.
However, this is not because of any desire to play fair, but rather a move of necessity.
Affirming that some of the tariffs on Chinese imports inherited from the previous administration served "no strategic purpose", US Treasury Secretary Janet Yellen said that Biden was considering removing them as a way to bring down inflation.
That Biden wants to remove the tariffs for that purpose comes as no surprise, given that inflation in the United States now stands at its highest level in 40 years, driven mainly by the massive stimulus package in response to the COVID-19 pandemic, the clogged global supply chains, and the Russia-Ukraine conflict. Gas prices in the US rose 3.9 percent in May and have soared nearly 50 percent in one year. The cost of groceries surged nearly 12 percent last month, the biggest increase since 1979. All this makes it an urgent task for the Biden administration to get the soaring inflation under control.
Thus the tariffs on Chinese imports worth about $500 billion are in its sights. The past several years have only served to prove, as the Trump administration was advised, that trade wars are not easy to win, the tariffs having failed to achieve any of their intended goals, be it bringing back manufacturing jobs or helping reverse the US trade deficit with China. In fact, trade between the world's two largest economies has continued to grow even after the launch of the trade war, with the US deficit widening to a record high of $396.6 billion in 2021.
Tariffs, as economists agree, are basically taxes on US consumers, who have to bear the brunt of increased prices of Chinese imports.
It is better late than never should the US now decide to correct its wrong. And removing the tariffs will not only help to bring down inflation, it will also help repair the US' ruptured trade ties with China.
The two countries' economies are highly complementary, and China-US trade and economic relations are win-win in nature, which explains why bilateral trade has increased more than 250-fold over the past four decades despite the trade war the US has waged.
As the world's economy recovers from the COVID-19 pandemic, the two countries have important roles to play in global macroeconomic coordination. The removal of tariffs, and a formal ending of the trade war, would be a tonic for bilateral relations and bode well for the world's economic future.