Eliminating tariffs on Chinese goods could shave 1% off of inflation rates and ultimately restore the public's confidence in the economy, says former U.S. Ambassador David Adelman.
Adelman, who served as the U.S. Ambassador to Singapore under the Obama Administration, recognized that while inflation will be the most important issue in midterm elections, President Joe Biden's ability to control inflation is limited. In light of this, he says, the federal government needs to devise creative ways to manage inflation and prevent a potential recession. And with $370 billion in Chinese imports each year, high tariff rates on Chinese goods are doing the U.S. economy no favors.
"Not only will removing tariffs be good for American consumers in the short run, over time, it will also help the president reset U.S.–China relations," Adelman told CNBC. "Ultimately, having economic engagement between the two largest economies would be good for the world."
The government is reviewing outdated tariffs on Chinese goods made by the Trump presidency. These policies were enacted in an attempt to start a trade war, but ultimately, they hurt the economy more than they helped; Adelman says these tariffs had no effect on the Chinese economy but served as a "boomerang" on the U.S. economy. Treasury Secretary Janet Yellen added that these tariffs served "no strategic purpose" and confirmed that Biden is considering removing them to fight inflation. CNBC reports that Biden will not need congressional permission to lift these tariffs if he signs an executive order.
However, signing an executive order could lead to backlash, says Robert Daly, Director of the Wilson Center's Kissinger Institute. Biden could be seen as soft on China, Daly adds, which could harm him in the polls if inflation isn't successfully lowered. Additionally, he may lose even more favor with Republicans in the Senate if he doesn’t negotiate to get something from China in return.