Biden Prepares Action to Reform Trump Tariffs on China

The details of the government’s plan are not final, but will likely be in three parts. First, a limited number of tariffs will be lifted, probably excise duties on consumer goods such as bicycles. Which tariffs will be included in the initial tariff relief is still under discussion, but two sources said the value is expected to be relatively small — $10 billion worth of imports from about $370 billion imposed by Trump is a value under consideration.

At the same time, the government is expected to announce that the US trade representative will open a new foreclosure process for companies seeking waivers from the tariffs on China. USTR granted a limited number of exemptions for 352 types of imports from China earlier this year, but companies and pro-free trade lawmakers have pushed the agency to grant further splits.

In addition to these actions, the government will also announce a new tariff investigation under Section 301 of the 1974 Trade Act, which will target sectors of the Chinese economy heavily subsidized by the Chinese Communist Party. The US has long complained that Beijing is supporting high-tech sectors such as semiconductors and batteries to unfairly disadvantage foreign competition, and the new tariff investigation is likely to result in new tariffs on those sectors in an effort to level the playing field for US companies.

However, the senior management official stressed that no decision on the rates has been made and talks are underway.

The decision is likely to come the same month that Biden meets with Chinese President Xi Jinping. But the government official stressed that the call, which is still being planned, is unrelated to the tariff issue, and rather part of ongoing efforts to maintain open lines of communication between governments.

The announcement will be the culmination of a year-long debate in the White House about when and how to reform Trump’s trade legacy to China. The government last year considered a plan to combine tariff relief for consumer goods with new excise taxes on high-tech Chinese goods, but chose to allow USTR Katherine Tai to engage her Chinese counterpart in economic talks before announcing the plan.

When initial talks between the Biden administration and China proved fruitless, the White House was ready to move forward with the plan late last winter, but Russia’s invasion of Ukraine pushed those plans backbecause many of the government’s economic and national security officials focused on supporting Kiev and punishing Moscow.

The move would be a win for Tai and Labor Secretary Marty Walsh, along with organized workers’ groups, who have pushed for most of the Trump-era tariffs to be maintained. Tai has repeatedly said that lifting tariffs would have no meaningful impact on inflation, although it would cost her power at the negotiating table with the Chinese.

The upcoming tariff action will correspond to an internal USTR review of China’s tariffs, which is required by law to take place this summer. So far, the agency has received more than 300 requests from domestic companies asking for tariff extensions.

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