President Joe Biden and his Chinese counterpart Xi Jinping are expected to meet on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco in November.
Saul Loeb | Afp | Getty Images
President Joe Biden is calling on the U.S. Trade Representative to triple the rate of Chinese tariffs on steel and aluminum imports as he tours the key battleground state of Pennsylvania.
On Wednesday, the president will visit the United Steelworkers headquarters in Pittsburgh.
Biden’s demand to raise the current 7.5% average tariffs on steel and aluminum is an attempt to make clear that his administration’s recent warnings about China’s trade practices are not vain threats.
During a visit to China last week, Treasury Secretary Janet Yellen raised concerns that Chinese subsidies were creating an oversupply of clean energy products, like solar panels and electric vehicles, which would exceed domestic demand. She fears excess capacity will be dumped onto global markets at artificially lower prices, which could stifle competition.
In an interview with CNBC’s Sara Eisen, Yellen said tariffs would not be shelved if these overcapacity issues were not resolved.
Chinese officials and state media have since denied the accusation of overcapacity, saying the abundant supply of clean energy products is the result of “constant innovations,” not government subsidies.
As China shrugs off concerns over overcapacity, the Biden administration is doubling down on what it perceives as a threat to global trade.
“China’s policy overcapacity poses a serious risk to the future of the U.S. steel and aluminum industry,” National Economic Council Director Lael Brainard said Tuesday in a call with journalists. “China cannot export to recovery. China is simply too big to follow its own rules.”
Biden’s balance
Biden’s growing efforts to raise tariffs come as he balances election-year politics with a fragile geopolitical landscape and heightened concerns about the strength of the U.S. economy.
On one hand, the White House is still working to thaw its relations with China after several years of near-frozen communication, partly triggered by the first round of Chinese tariffs imposed by former President Donald Trump, which almost trigger a full-blown trade war.
Tariffs may also have unintended economic impacts by increasing U.S. manufacturing costs, which could ultimately result in higher consumer prices. It would be an unwelcome outcome at a time when Biden is already in the midst of a years-long battle to reduce stubborn inflation and prove to voters that his economic agenda is working.
A senior administration official on Tuesday rejected the idea that tariff hikes would lead to higher inflation.
“If taken, these measures will not increase inflation, but they will protect American jobs and the steel industry,” the official said in a call with reporters. “Residual inflation does not come from goods, these actions will not change that.”
On the other hand, Biden’s campaign seeks to maintain a hawkish stance toward China as he competes with Trump for blue-collar votes. With this in mind, Biden will also reiterate his opposition to the proposed sale of US Steel to Japan’s Nippon Steel.
“It is important that US Steel remains a nationally owned and operated company,” a senior administration official said Tuesday. “The president will make it clear again. He told the steelworkers he would support them and he means it.”
cnbc
