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Tuesday, June 28, 2022

OPINION:

President Biden is considering the cancellation of former President Donald Trump’s successful China tariffs, ostensibly to mitigate the worst inflation the U.S. has faced in 40 years. Gas prices have more than doubled under Mr. Biden’s tenure, reaching a record $5 per gallon nationwide average in recent weeks. Rather than taking responsibility for the excessive stimulus caused by his American Rescue Plan Act and owning the anti-energy policies that have generated these crushing gas prices, Mr. Biden seeks to blame Mr. Trump’s China tariffs.

Eliminating tariffs imposed on China would have a minuscule effect on inflation while emboldening yet another autocrat, as it would represent a unilateral concession to the Communist Chinese government. Commerce Secretary Gina Raimondo confirmed that Mr. Biden has personally asked her to explore potential moves on the issue.


The People’s Republic of China is the premier threat to U.S. national security and a menace to its neighbors. It remains Beijing’s official policy to “reunify” with Taiwan. China’s conquest of Taiwan, home to 92% of the world’s production capacity for the advanced semiconductors that make modern life possible, would give it a commanding position over the indispensable sea trade lanes in East Asia and would be a disaster for the United States.

The Chinese Communist Party supports the repeal of the Trump tariffs because they know it would advantage them. The tariffs established credible deterrence in our relationship with China for the first time in decades. They brought the Chinese Communist Party to the table for an unprecedented “Phase 1” trade deal in 2020, aimed at establishing fair and reciprocal trade. It required major structural changes by China in the areas of intellectual property, technology transfer, agriculture, financial services, currency, expanding trade and dispute resolution. At least one member of the Biden administration, U.S. Trade Representative Katherine Tai recognizes the risk, saying, “Lifting tariffs now would cost the U.S. leverage at the negotiating table with the Chinese and would not do much to combat inflation.”

Mr. Trump imposed these tariffs to address one of the most important threats to American prosperity: the unequal and predatory trade practices of the People’s Republic of China. Before Mr. Trump’s tariffs were implemented in 2018, China’s intellectual property theft cost the United States an estimated $225 billion to $600 billion per year, and our trade deficit with China reached $418 billion. Both of these contributed to a hollowing out of America’s manufacturing base, costing 3.7 million American jobs between 2001 and 2018. As a result of Mr. Trump’s America First economic policies, more than 500,000 manufacturing jobs returned to U.S. shores between Mr. Trump’s November 2016 election and February 2020.

There is no proof China tariffs significantly increased inflation. From 2018 to 2020, inflation in the U.S. averaged 1.8%. Under Mr. Biden, the Consumer Price Index rose more than 7.5% in 2021 and could well reach 8.0% inflation this year. Removing all of Mr. Trump’s tariffs may lower inflation by a paltry 0.26%, according to a recent study by the Peterson Institute for International Economics.

Rather than the present inflation crisis arising from Mr. Trump’s China policy, it is overwhelmingly due to policies that Mr. Biden has endorsed or enacted himself. A March 2022 study by the Federal Reserve Bank of San Francisco found that the U.S. inflation rate has grown higher and more rapidly than in other advanced economies since Mr. Biden took office in early 2021 due to “direct fiscal support introduced to counteract the economic devastation caused by the pandemic.” The same study shows a massive spike in U.S. disposable income corresponding to the ARP, which injected trillions of dollars of direct assistance into consumers’ pockets and may explain about three percentage points of the inflation realized by early 2022.

A successful “America First” economic policy means empowering hardworking American citizens to strengthen our economy by pursuing their own personal prosperity, free from China’s economic manipulation. The way to ensure this is a free — and fair — foreign trade policy that renews American industry, jobs, and competitiveness.

The removal of the Trump-era China tariffs would result in a minuscule impact on inflation, at best, and would resume the leakage of jobs and capital to China that characterized the pre-Trump era while bolstering the corrupt and authoritarian CCP regime. Mr. Biden’s misguided and desperate bid for temporary popularity must not take precedence over preserving a dynamic economic strategy that has successfully stymied our chief geopolitical rival.

• Michael Faulkender is a former assistant secretary for economic policy at the U.S. Department of the Treasury. Steve Yates is a former deputy assistant to Vice President Dick Cheney for National Security Affairs and is currently a senior fellow and chair for the China Policy Initiative at America First Policy Institute.


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