Business groups and some outside economists are pushing management to ease at least part of their import taxes, saying it would be an important step the president could take to immediately cut costs to consumers. However, any government action to lift tariffs is unlikely to have a significant impact on inflation, which reached 8.6% in May – and the political repercussions could be serious. A major study this year predicted that a move to raise tariffs could save households $ 797 a year, but administration officials say the real effect would likely be much smaller, in part because Mr Biden is unlikely to overturn it all. federal government tariffs and other protective trade measures. The debate over tariffs comes at a precarious time for the economy. Stubborn inflation has shaken consumer confidence, pushed stock markets into falling territory – below 20% from their January high – and sparked fears of a recession as the Federal Reserve moves faster to raise interest rates. Some economists in the administration privately estimate that the tariff cuts Biden is considering would reduce overall inflation by just a quarter of a percentage point. However, as an indication of how big a political problem inflation has become, officials weigh at least a partial easing anyway, in part because the president has few other options. Tariffs in China are raising commodity prices for American consumers by effectively adding a tax on what they already pay for imported goods. Theoretically, the abolition of tariffs could reduce inflation if companies reduced – or stopped raising – prices on these products. Mr Biden said the reduction in inflation depended mainly on the US Federal Reserve, which is trying to reduce demand by making money more expensive to borrow and spend. The Fed is expected to raise interest rates on Wednesday, possibly marking its biggest rise since 1994 as it seeks to control persistent inflation. The prospect of large interest rate hikes has scared Wall Street, which entered a bear market on Monday before stabilizing on Tuesday. Any move to adjust tariffs could have significant compromises. It could encourage companies to maintain their supply chains in China, undermining another White House priority for restoring jobs in America. And it could expose Biden – and his Democratic allies in Congress – to attacks that he is letting Beijing fall apart when America’s economic relationship with China has become openly hostile, deepening a wedge issue for the midterm elections and next presidential race. China has not yet complied with its commitments as part of the Trump-US trade deal, including the failure to purchase significant quantities of gas, Boeing planes and other US products. Mr Trump has imposed tariffs on most US imports from China as part of a campaign to force China to change its economic practices. More than two years later, the United States maintains tariffs of 25 percent on about $ 160 billion worth of Chinese goods, while another $ 105 billion, mostly consumer goods, are taxed at 7.5 percent. While Mr. Biden has criticized the way Mr. Trump used the tariffs, he has also acknowledged that China’s economic practices pose a threat to America.
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Business groups such as the US Chamber of Commerce and economists such as Lawrence H. Summers, the Treasury Secretary under President Bill Clinton, have urged the White House to remove as many tariffs as possible, saying it would help consumers cope with rising prices. Mr Summers and others welcomed the March study by economists at the Peterson Institute for International Economics, who argued that a “feasible package” of tariff abolition – which includes the abolition of a number of levies and trade programs – was not. Only applies to China – could cause a one-time drop in the Consumer Price Index of 1.3 percentage points to a profit of $ 797 per US household. In an interview, Summers said the tariff cuts were “probably the strongest microeconomic or structural action the government can take to reduce prices and inflationary pressures relatively quickly.” But even those within the administration who support tariff easing are skeptical that the move would provide nearly as much relief as Mr Summers and others have predicted. “I think some reductions can be justified and could help reduce the prices of things that people who are burdensome buy,” said Janet L. Yellen, a finance minister and advocate of some duty returns, to a House committee last year. week. “I want to make it clear, I honestly do not believe that tariff policy is a panacea for inflation.” Ms Yellen met on Tuesday with the board of the National Retail Federation, which has long supported tariffs and recently said eliminating them would reduce inflation. A key question is whether the tariff relief companies will actually pass on these savings in the form of lower prices or choose to absorb them as profits. Consumers have so far continued to pay more for everyday items, which companies cite as profit-seeking calls to investors as a reason for them to charge more. David Frances, senior vice president of government relations at the National Retail Federation, said the administration was trying to figure out how quickly the tariff cuts would translate into price changes and asked assurances from retailers that any savings would be made to consumers. “I think in the minds of the management, there will be a return on prices and the money will go out of price,” he said. “I’m not sure you will see a dramatic change like this.” Instead of price reductions, for example, stores may choose to wait even longer for price increases. Retailers “will do what they can to bring about dramatic pricing changes where possible,” but they continue to face cost pressures in the supply chain, he said. Rising prices have surprised Americans across the economy, depleting the purchasing power of households and contributing to Biden’s steady decline in acceptance rates. The Consumer Price Index rose 8.6% in May compared to the previous year, with its fastest growth rate in 40 years. Mr Biden says he has made fighting inflation his top economic priority. Last week, Biden announced a two-year tariff cut on imported solar panels, which could cut costs for domestic consumers but effectively prompted a Commerce Department investigation into illegal commercial practices by Chinese manufacturers. Domestic business groups, labor leaders and populist Democrats, such as Ohio State Representative Tim Ryan, who is trapped in a competitive race for the Senate, have pushed Biden to keep tariffs. Mr Ryan gave a press conference on Tuesday urging Biden not to give up any economic territory in Beijing. Economists disagree on how much relief the government could receive from the tariffs. Card 1 of 5 What is inflation? Inflation is a loss of purchasing power over time, which means that your dollar will not go as far tomorrow as it does today. It is usually expressed as the annual change in prices for everyday goods and services such as food, furniture, clothing, transportation and toys. What causes inflation? It may be a result of growing consumer demand. However, inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems. Is Inflation Bad? It depends on the circumstances. The rapid rise in prices is causing problems, but moderate price gains can lead to higher wages and higher employment. Can Inflation Affect the Stock Market? Rapid inflation usually causes problems for stocks. Financial assets generally perform historically poorly during the boom of inflation, while tangible assets such as homes retain their value better. This is partly because inflation estimates cited by Mr. Summers and others include a much broader policy relaxation than Mr. Biden thinks, including the popular “Buy America” programs demanded by the federal government. and some contractors buy American-made goods, even if they are more expensive. The Peterson Institute study is “something between fiction or interesting academic practice” that does not reflect the real pain Americans are experiencing, US trade spokeswoman Kathryn Thai said in an interview last month. Kim Glas, chairwoman of the National Council of Textiles Organizations, which has pressured management to maintain tariffs, said tariffs in her industry amounted to “dollar pennies” for Chinese products that were already priced much lower than alternatives. Countries. Customs prices apply to the price of the goods coming to the border and not to the final retail price charged at a store. For a pair of jeans from China, that import price was $ 4.28 in the first two months of 2022, which means the 7.5 percent duty added just 32 cents to the consumer cost, Ms Glass said. It was the retail mark – which can bring jeans to $ 30, $ 40 or $ 100 – that accounts for most of the shock with the stickers, he added. The issue has divided Biden’s closest advisers. Ms. Tai? Jake Sullivan, national security adviser; Tom Vilsack, secretary of agriculture; and others have argued that the drop in contributions is …
