President Joe Biden is preparing to alter some of former President Trump’s tariffs on China, with a decision expected this month.
The administration is likely to announce action to lift a narrow set of tariffs on Chinese imports this month, said three industry officials and former federal officials with knowledge of administration plans. A senior administration official, who spoke anonymously to discuss policy plans, said no final decision has been made on timing.
The decision comes as the White House continues to seek ways to tame historically high inflation outside of actions by the Federal Reserve to hike interest rates. Some administration officials and outside economists have identified lifting some of the tariffs on China as a way to partially ease high prices U.S. consumers are now paying. But in its current form, the tariff plan would be a defeat for Biden officials like Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo, who have pushed for broader tariff relief as a way to combat inflation and show voters ahead of the midterms that Biden is working to counteract rising prices.
The details of the administration’s plan are not final, but are likely to involve three parts. First, a narrow set of tariffs will be lifted, likely duties on consumer goods like bicycles. Which duties will be included in the initial tariff relief are still under discussion, but two sources said the value is expected to be relatively small — $10 billion worth of imports out of roughly $370 billion imposed by Trump is one value under consideration.
At the same time, the administration is expected to announce that the U.S. Trade Representative will open a new exclusion process for companies to win exemptions from the tariffs on China. USTR earlier this year awarded a narrow set of exemptions on 352 types of imports from China, but companies and pro-free trade lawmakers have pushed the agency to award further carve outs.
Alongside those actions, the administration will also announce a new tariff investigation under Section 301 of the 1974 Trade Act that will target sectors of the Chinese economy that are heavily subsidized by the Chinese Communist Party. The U.S. has long complained that Beijing supports high-tech sectors like semiconductors and batteries to unfairly disadvantage foreign competition, and the new tariff investigation will likely result in new duties on those sectors in an effort to level the playing field for American firms.
The senior administration official, however, stressed that no decision on the tariffs has been made, and conversations are ongoing.
The decision will likely come in the same month that Biden speaks with Chinese President Xi Jinping. But the administration official stressed that the call, which is still being planned, is not related to the tariff issue, and rather part of ongoing efforts to maintain open lines of communication between the governments.
The announcement will represent the culmination of a year-long debate at the White House over when and how to reshape Trump’s trade legacy on China. The administration last year considered a plan to pair tariff relief for consumer goods with new duties on high-tech Chinese goods, but elected to allow USTR Katherine Tai to engage her Chinese counterpart in economic conversations 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 back, as many of the administration’s economic and national security officials focused on supporting Kyiv and punishing Moscow.
The action would be a victory for Tai and Labor Secretary Marty Walsh, along with organized labor groups, who have pushed for most of the Trump-era tariffs to stay in place. Tai has repeatedly said that lifting tariffs would not meaningfully impact inflation, though it would cost her leverage at the negotiating table with the Chinese.
The coming tariff action will correspond with an internal USTR review of the China tariffs, mandated by law to take place this summer. So far, the agency has received more than 300 requests from domestic companies requesting the tariffs be extended.