Washington urged to end costly tariff war on China amid surging inflation

-- A growing number of U.S. business groups and lawmakers are urging the Biden administration to end the costly tariff war on China as U.S. inflation surged to a 40-year high last month.

-- The costly trade war on China, launched by former U.S. President Donald Trump more than three years ago, was a failure in every possible way.

-- Failing to put an end to the festering trade war, or pursuing significant decoupling with China, would cause both short-term shocks to company supply chains and productivity and long-term damage to U.S. economic growth and competitiveness.

by Xinhua writers Gao Pan, Xiong Maoling and Xu Yuan

WASHINGTON, Feb. 19 (Xinhua) -- A growing number of U.S. business groups and lawmakers are urging the Biden administration to end the costly tariff war on China as U.S. inflation surged to a 40-year high last month.

In addition to hurting U.S. businesses and workers, the self-defeating tariffs, which are paid by American importers, have also pushed up prices of imported goods and elevated the living costs of Americans across the country.

With the Omicron variant slowing the economic recovery and the pandemic aid from the federal government fading, reducing tariffs on Chinese goods would help ease inflation pressures and give American workers and businesses badly needed economic relief, economists have said.

GROWING CALLS FOR TARIFF RELIEF

Many Americans have felt the sting of inflation in recent months, with the consumer price index (CPI) jumping by 7.5 percent in January from a year earlier, the fastest annual pace in 40 years.

Prices are rising across the board, from household essentials like groceries and gas to used cars and trucks, taking a bigger toll on low-income households.

Apparel prices were 5 percent higher, food prices were 7 percent higher, and gas prices were 40 percent higher than in January 2021, according to the U.S. Labor Department.

"These price increases are not subtle and not sustainable. Consumers are feeling taxed at the register -- online and in-store -- due to record-setting inflationary pressure," Steve Lamar, president and CEO of the American Apparel and Footwear Association (AAFA), said last week in a statement after the release of the January CPI report.

"AAFA continues to call on the Biden administration to pursue swift and effective policies to immediately alleviate the increasingly overwhelming costs on companies," Lamar said.

American companies need to see "immediate elimination and refund of punitive Section 301 tariffs" imposed by the former Trump administration on imported Chinese goods, he added.

The record U.S. trade deficit last year, in large part due to a high demand for foreign imports, also "reinforces the need for immediate relief" from tariffs on Chinese goods, according to Americans for Free Trade, a coalition of more than 150 industry associations that are united in the fight against tariffs.

A bipartisan group of more than 140 U.S. lawmakers have also called for immediately expanding a tariff exclusion process on Chinese goods to help American businesses and workers.

"Sadly, the Section 301 tariffs have broadly impacted U.S. businesses in the manufacturing, agriculture, fishing, retail, energy, technology, and services industries," the lawmakers said last month in a letter to U.S. Trade Representative (USTR) Katherine Tai.

"These increased costs are undermining the competitiveness of American manufacturing workers whose inputs are now more expensive compared to those made by foreign competitors," the lawmakers said, urging Cai to expand the exclusion process as quickly as possible to give American workers and businesses badly needed economic relief.

With many Americans having difficulty making ends meet when food, housing and gasoline prices have risen substantially, Democrats and the Biden administration could feel the pain in this year's congressional midterm elections, analysts said.

An opinion article published by The Hill said "the reasons to end the trade war with China keep piling up. Inflation is the latest case in point: American businesses and consumers, not Chinese exporters, are bearing the cost of Trump-era tariffs in the form of higher prices on made-in-China parts and products."

"Rising inflation poses serious challenges to President (Joe) Biden and he needs to work hard to explain what his administration is doing to lower price pressures and help people cope with rising prices," Darrell West, a Brookings Institution senior fellow, told Xinhua.

"In fact, some economists have urged President Biden to help the fight against inflation by lifting the Trump tariffs -- something he could do without Congressional approval," said Paul Krugman, a Nobel laureate economist and New York Times columnist.

COSTLY TRADE WAR ON CHINA UTTER FAILURE

The costly trade war on China, launched by former U.S. President Donald Trump more than three years ago, was a failure in every possible way, according to economists, lawmakers and business groups.

"The trade war with China hurt the U.S. economy and failed to achieve major policy goals outlined by the Trump administration," Oxford Economics and the U.S.-China Business Council have argued in a report released last year.

"Rather than benefiting the economy, it has reduced U.S. economic growth and employment, resulting in an estimated peak loss of 245,000 jobs," the report said, noting scaling back tariffs would likely benefit the U.S. economy and create jobs.

However, failing to put an end to the festering trade war, or pursuing significant decoupling with China, would cause both short-term shocks to company supply chains and productivity and long-term damage to U.S. economic growth and competitiveness, the report warned.

While the Trump administration had hoped to rein in the U.S. trade deficit by slapping tariffs on Chinese imports, the trade deficit soared to a record high last year as imports surged, according to the U.S. Commerce Department.

In a letter to the USTR earlier this month, a bipartisan group of 41 U.S. senators acknowledged that the "exceptional reliance on China" for some specific imports suggests that moving these supply chains out of China is "uniquely unlikely."

Noting that these tariffs failed to accomplish their stated goal of creating leverage in negotiations with China, Jonathan Gold, spokesperson of Americans for Free Trade, a coalition of U.S. businesses, trade organizations and workers against tariffs, said, "we continue to call on the Biden administration to end the tariffs that remain in place and put an end to this misguided and failed trade policy."

In a report delivered to the U.S. Congress on Wednesday, the USTR office said that "we cannot build a wall between the United States and China," as doing so would adversely affect American interests.

"That would ignore China's importance to, and integration in, the world economy and would only change the mode of its impact on the United States," the report said.

The USTR office said the United States is continuing to pursue bilateral engagement with China and is seeking to find areas where some progress can be achieved. But it has not given a clear indication whether the United States plans to lower tariffs on Chinese goods.

"Trump's trade policies were foolish and costly -- they failed by any measure you choose -- but it may be a long time before any president is in a position to undo the damage," Krugman said.