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Biden says White House could drop Trump China tariffs to lower consumer prices

by admin
May 10, 2022
in Business
Biden says White House could drop Trump China tariffs to lower consumer prices


President Joe Biden said he could drop some of the tariffs imposed against Chinese imports to help control rising consumer prices in the U.S. — just as Wall Street braces for another inflation report north of 8%.

The White House is reviewing the penalties imposed under former President Donald Trump — which raised prices on everything from diapers to clothing and furniture — and could opt to remove them altogether, Biden said in addressing the nation from Washington on Tuesday.

“We’re looking at what would have the most positive impact,” Biden said, adding that removing the tariffs was currently under discussion.

Trump levied a raft of financial penalties on Chinese goods in a long-running tit-for-tat trade war with Beijing in an effort to bolster American-made goods.

The extent to which removing Trump’s taxes on Chinese products would cool inflation is a matter of debate among economists, but many say easing or removing the tariffs altogether is among the few options available to a White House eager to pull every lever available to ease costs.

The president reiterated that a combination of Covid-19 protocols at home and abroad and Russian President Vladimir Putin’s invasion of Ukraine has caused prices in the U.S. to jump at their fastest pace since the early 1980s.

“I want every American to know that I am taking inflation very seriously,” Biden said. “The first cause of inflation is a once-in-a-century pandemic. Not only did it shut down our global economy, it threw supply chains and demand completely out of whack.”

“And this year we have a second cause: Mr. Putin’s war in Ukraine,” he added, referring to the dramatic rise in oil prices sparked by Moscow’s attack earlier in 2022.

While West Texas crude futures are well off highs of over $130 a barrel seen in March, oil contracts for June delivery were last seen trading around $100, about $30 above where they began the year.

The president noted that the war has also driven up the prices of contracts for key food products such as wheat and corn, which are up 40% and 30%, respectively, in 2022. Russia and Ukraine together supply more than a quarter of the world’s wheat.

CNBC Politics

Read more of CNBC’s politics coverage:

Economists say the combination of the pandemic — especially China’s recent, and severe, efforts to curb rising cases there — and the war in Ukraine are both to blame for inflation’s 8.5% rise over the last year through March, the highest reading since 1981. Wall Street is eager to read the Labor Department’s upcoming report on April inflation, which is scheduled for release at 8:30 a.m. ET Wednesday.

Economists polled by Dow Jones expect that report to show inflation rose 8.1% in the 12 months ending in April.

Biden’s comments the day before the release is the administration’s latest attempt to convince the American public that the White House is exploring all options available to quell rising prices. Dozens of polls have indicated that Americans now believe inflation is the chief issue facing the U.S. and a threat to the economic recovery from the Covid recession.

While some economic measures have staged remarkable rebounds — the U.S. employment rate held steady at a low 3.6% last month — higher gas and grocery bills continue to erode paychecks and spark angst across the country.

Biden has in recent weeks sought to pacify those frustrations through regular speeches.

Last week, he touted sizable reductions in the federal deficit this fiscal year as a key departure from what he characterized as rampant spending by his Republican predecessor and a step toward fiscal responsibility and lower prices.

Republicans argue that the rash of inflation is, in large part, thanks to the Democrats’ ambitious economic policies, including trillions in Covid relief in the American Rescue Plan as well as the bipartisan infrastructure law Biden signed in 2021.

The GOP also points out that federal spending might have been higher, and the expected deficit larger, if Biden and his Democratic colleagues had managed to pass a suite of climate, housing and workforce legislation once known as the Build Back Better plan.

Those attacks pose a political problem for Democrats as they face an uphill battle to retain control of Congress in November’s key midterm elections. The Senate is split 50-50 between Democrats and Republicans, while the House is divvyed 221-209 in favor of Democrats.

Biden in his recent comments has countered Republican barbs by trumpeting the administration’s efforts to lower prescription drug costs and to raise taxes on only the richest Americans.

“What’s the congressional Republican plan? They don’t want to solve inflation by lowering your costs. They want to solve it by raising your taxes and lowering your income,” Biden said Tuesday. “Their plan is actually going to make working families poorer.”



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