Senior US and Chinese officials yesterday discussed US economic sanctions and tariffs amid reports that US President Joe Biden’s administration is close to rolling back some of the trade levies imposed by former US president Donald Trump.
The lifting of tariffs and sanctions and the fair treatment of Chinese enterprises are areas of concern to China, Chinese Vice Premier Liu He (劉鶴) told US Secretary of the Treasury Janet Yellen in a video call yesterday morning, according to a statement from the Chinese Ministry of Commerce.
According to Beijing, the two sides discussed economic policy and stabilizing global supply chains, agreeing that it is significant for the US and China to strengthen communication and coordination in those areas for the benefit of both countries and the rest of the world.
Photo: Bloomberg
The talks were pragmatic and constructive, it said.
The US called the talks “candid and substantive,” but the official readout of the meeting did not mention tariffs or sanctions.
However, it did say that Yellen “frankly raised issues of concern including the impact of Russia’s war against Ukraine on the global economy and unfair, non-market” economic practices by China.
The call came after reports that Biden might announce a rollback of some US tariffs on hundreds of billions of dollars of Chinese goods as soon as this week.
As inflation increases in the US, expectations are rising that the administration would ease some of the taxes to help lower the costs of everyday merchandise.
However, senior members of the administration appear divided over the need to lift tariffs.
Yellen last month said the Biden administration wanted to reconfigure the tariffs, which “really weren’t designed to serve our strategic interests.”
That is a contrast with US Trade Representative Katherine Tai (戴琪), who has called the levies “leverage” against China and questioned how much effect removing them would have on inflation.
Analysts say scrapping the tariffs would have only a marginal effect on US inflation and China’s trade, with a possible recession in the world’s largest economy a bigger threat to China’s outlook.
“The tariffs’ negative impact on Chinese exports has been limited and so a reduction in them won’t have too big an impact either,” said Larry Hu (胡偉俊), head of China economic analysis at Macquarie Group Ltd. “The impact on US inflation would be limited too -- prices in the US didn’t surge, for example, in 2019 when tariffs were in place.”
“The more concerning thing for exports in the short term is a potential US recession,” he said.
“With or without the tariffs, China’s export growth will slow down anyway,” he added.
Barclays PLC estimated that if there was a complete rollback of tariffs, the maximum direct effect on US inflation is a one-time reduction of 0.3 percentage points.
The tariffs have not achieved the intended goal of slowing down Chinese exports and rebalancing the trade relationship with the US. While China’s economy has been undermined by COVID-related shutdowns this year, exports to the US in the first five months of this year still grew 15.1 percent from a year earlier, after jumping almost 28 percent last year and 8 percent in 2020.
Imports increased 4 percent so far this year, official data showed, putting the bilateral trade balance on track for another record year.
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