U.S. hints at rollback of China levies

BEIJING -- China's envoy to trade war talks with Washington expressed concern about U.S. tariffs on Chinese imports during a phone call Tuesday with Treasury Secretary Janet Yellen, the Ministry of Commerce announced, but it gave no indication of progress toward resolving an array of conflicts.

Vice Premier Liu He and Yellen also discussed the global economy and supply chain problems, a ministry statement said.

"The Chinese side expressed concern about issues such as the United States canceling tariffs and sanctions on China and fair treatment of Chinese enterprises," the statement said.

Trade envoys from the two governments talk regularly by phone and video link but they have yet to announce a date to resume face-to-face meetings.

Economy watchers are looking for President Joe Biden to announce as soon as this week a rollback of some U.S. tariffs on Chinese consumer goods -- as well as a new investigation into industrial subsidies that could lead to more duties in strategic areas like technology.

Biden has not yet made a final decision, and the timing could slip, according to people familiar with the deliberations, who asked not to be identified without permission to discuss private conversations.

It would mark his first major policy step on trade ties between the world's two biggest economic powers. The president in recent weeks held a number of meetings with senior economic advisers where options for a decision on the Trump-era tariffs were discussed, according to the people.

Hints that the Biden administration is considering an easing in some of the tariffs on $300 billion in Chinese imports have multiplied as inflation has accelerated, putting pressure on U.S. officials to find ways to tamp down prices paid by consumers for everyday merchandise.

Biden said last month he'll be talking to Chinese President Xi Jinping "soon" and told reporters he was "in the process" of making up his mind about whether to lift tariffs.

Some members of Biden's Cabinet suggested he use the upcoming call with Xi to ask him for reciprocal tariff cuts on American goods currently facing import duties, though that idea was quickly shot down, the people said.

A White House spokeswoman said no decision on the tariffs has been made but the administration wants to ensure they are aligned with "economic and strategic" priorities and don't unnecessarily raise costs for Americans.

The Wall Street Journal previously reported a decision could come as soon as this week.

The Biden administration said in May it was taking the first step toward a review of the tariffs, a process required to keep them from starting to expire in July. Industries that have benefited from duties imposed under former President Donald Trump have until today to comment and request an extension of the levies.

U.S. Treasury Secretary Janet Yellen said June 8 that the administration is looking to "reconfigure" Trump-era tariffs, imposed on Chinese goods under what's known as Section 301 of the Trade Act of 1974, that "really weren't designed to serve our strategic interests."

Trump used Section 301 to hit China with the tariffs starting in July 2018 after an investigation concluded China stole intellectual property from American companies and forced them to transfer technology.

Some existing tariffs have hurt American consumers and businesses, even though tariff policy isn't a cure-all for inflation, Yellen told lawmakers.

Commerce Secretary Gina Raimondo last month said the administration had decided to keep tariffs on steel and aluminum but was considering dropping them on other goods.

"There are other products -- household goods, bicycles -- it may make sense," she said June 5 on CNN's "State of the Union."

U.S. Trade Representative Katherine Tai, on the other hand, has made clear she's not convinced that any tariff moves would have an impact on price pressures. In a recent congressional hearing, she told lawmakers that "with respect to short-term challenges, there's a limit to what we can do with respect to, especially inflation."

And Biden is running the risk of irking unions as he mulls lifting some of the tariffs. Labor unions have opposed any such move, saying the levies help protect U.S. factory jobs. Biden has repeatedly pledged to be the most pro-union president in U.S. history, and Democrats are counting on labor support in key mid-term Congressional elections in November.

The White House has asked retail companies for a commitment to lower prices following any tariff cuts, but executives rebuffed that request and told U.S. officials it was an unrealistic expectation, the people said.

The Biden administration has been weighing a new investigation into Chinese subsidies and their damage to the U.S. economy as a way to pressure Beijing on trade. That followed a phone call at the time between Biden and Xi in which Biden expressed frustration with the level of China's engagement with his team.

While China's economy has been hemmed in by covid-related shutdowns, Chinese exports to the U.S. in the first five months of 2022 in dollar terms grew 15.1% on the year while imports rose 4%, according to official data.

Information for this article was contributed by Jenny Leonard and Eric Martin of Bloomberg News (WPNS) and by The Associated Press.

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