The White House finally has a meeting on the books to determine how to handle Trump-era tariffs on Chinese goods that have remained unchanged since Biden’s inauguration.
During a press conference Monday in Tokyo, President Joe Biden told reporters that he will meet with Treasury Secretary Janet Yellen when he returns to the U.S and that tariff reductions are a possibility.
"I am considering it,” Biden said of lowering the duties. “We did not impose any of those tariffs. They were imposed by the last administration, and they are under consideration."
During a recent Yahoo Finance live interview, Biden adviser Bharat Ramamurti gave a bit more insight on the issues that White House officials will examine when reconsidering the tariffs.
“We are in the midst of [a] holistic review,” said Ramamurti, deputy director of the National Economic Council. “The impacts of tariffs on prices and inflation is one factor but tariffs can serve other purposes as well for national security, for industrial policy, and domestic development.”
The meeting may finally help resolve a long simmering debate since Biden’s inauguration. Yellen recently confirmed that she favors eliminating at least some tariffs, saying they "aren't very strategic" and could hurt U.S. consumers and businesses.
The White House may zero in on tariffs on consumer goods like clothing, which Trump imposed as part of its ongoing trade war with China — eliminating those duties could save Americans money right away.
A main administration figure on the other side reportedly is U.S. Trade Representative Katherine Tai, who is pushing to hold off on making immediate reductions as other issues between the two issues are ironed out.
'We bring to that competition a number of strengths'
It will be a complicated decision for Biden and his aides. Cutting the tariffs could ease inflation but would also deliver a win to the Chinese economy. The average tariff across all Chinese goods — on things ranging from solar panels to steel to shoes — sits at 6%.
The Peterson Institute for International Economics recently determined that dropping that number to 4% would save roughly $800 per U.S. household thanks to a one-time reduction of 1.3 percentage points off the consumer price index.
But the move would also come as China has failed to live up to its side of the recent trade deal. The “phase one” trade deal that then-President Trump signed in January 2020 stipulated that the U.S. would remove tariffs if China sharply increased its purchases of U.S. goods.
But China hasn't held up its end of the bargain. One recent estimate says China has purchased just 57% of what it promised overall in the trade deal and none of the additional $200 billion in imports it pledged.
Biden has loosened many of Trump’s trade restrictions on other places, especially Europe, but the levies on China have stayed so far to provide leverage on other issues from China’s contribution to global warming to its relationship with Russia.
In the end, close observers will anxiously await which tariffs stay and which ones go as part of the larger confrontation between the two nations.
“We bring to that competition a number of strengths, and we are building on those strengths with the president's leadership,” Ramamurti says.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.