Beyond undermining the rules-based international trading system, the tariffs that Donald Trump’s administration imposed on Chinese imports in 2018, and China’s retaliatory tariffs on US goods, are hurting American households and firms. President Joe Biden’s failure to reverse them could end up costing him next year’s election.
NEW YORK – At their recent summit in San Francisco, US President Joe Biden and Chinese President Xi Jinping agreed on a few important issues. Notably, the two countries will resume military-to-military communication, thereby reducing the chances of an accidental conflict, and China will do more to restrict the export of chemicals used to make the powerful synthetic opioid fentanyl – a major cause of death in the United States. But there is one crucial area where progress remained elusive: tariffs.
In 2018, then-US President Donald Trump’s administration hiked the tariff rate on imports from China from slightly over 3% to more than 21% – a level unseen in the US since before World War II. This prompted China to retaliate with higher tariffs on US imports from about 8% to some 19%. As China also lowered its tariffs on imports from all other countries, it reduced the competitiveness of US goods in the Chinese market by an even greater amount.
At the end of 2019, Trump and Xi reached a “phase one” agreement that froze the tariffs. The deal was a coercive one, designed to compel China to increase imports from the US at the expense of other trading partners, using means that are illegal under World Trade Organization rules. Ultimately, China could not fulfill its purchase commitments. In any case, a WTO panel ruled in 2020 that the Trump tariffs are incompatible with America’s legal obligation to abide by the organization’s rules.
NEW YORK – At their recent summit in San Francisco, US President Joe Biden and Chinese President Xi Jinping agreed on a few important issues. Notably, the two countries will resume military-to-military communication, thereby reducing the chances of an accidental conflict, and China will do more to restrict the export of chemicals used to make the powerful synthetic opioid fentanyl – a major cause of death in the United States. But there is one crucial area where progress remained elusive: tariffs.
In 2018, then-US President Donald Trump’s administration hiked the tariff rate on imports from China from slightly over 3% to more than 21% – a level unseen in the US since before World War II. This prompted China to retaliate with higher tariffs on US imports from about 8% to some 19%. As China also lowered its tariffs on imports from all other countries, it reduced the competitiveness of US goods in the Chinese market by an even greater amount.
At the end of 2019, Trump and Xi reached a “phase one” agreement that froze the tariffs. The deal was a coercive one, designed to compel China to increase imports from the US at the expense of other trading partners, using means that are illegal under World Trade Organization rules. Ultimately, China could not fulfill its purchase commitments. In any case, a WTO panel ruled in 2020 that the Trump tariffs are incompatible with America’s legal obligation to abide by the organization’s rules.