U.S. President Joe Biden and Chinese President Xi Jinping are expected to meet on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco in November.
Saul Loeb | AFP | Getty Images
President Joe Biden calls for United States Trade Representative He tripled Chinese import tariffs on steel and aluminum as he toured the key battleground state of Pennsylvania.
On Wednesday, the president will visit the United Steelworkers headquarters in Pittsburgh.
Biden’s request to increase the current average tariffs on steel and aluminum of 7.5% is to show that his administration’s recent warnings about China’s trade practices are not empty threats.
During a visit to China last week, Treasury Secretary Janet Yellen expressed concern that Chinese subsidies are creating an oversupply of clean energy products such as solar panels and electric vehicles that exceed domestic demand. She worries that excess capacity could be dumped on global markets at artificially low prices, potentially stifling competition.
In an interview with CNBC’s Sarah Eisen, Yellen said that if these overcapacity issues cannot be resolved, tariffs will not be off the table.
Chinese officials and state media have since denied accusations of overcapacity, saying their ample supply of clean energy products is the result of “continuous innovation” rather than government subsidies.
The Biden administration is stepping up its response to what it sees as global trade threats as China shakes off overcapacity concerns.
“China’s policy-driven overcapacity poses a serious risk to the future of the U.S. steel and aluminum industries,” Lael Brainard, director of the U.S. National Economic Council, told reporters on Tuesday. “China cannot recover through exports. China is too Too old to follow your own rules.”
Biden’s balancing act
Biden’s ramp-up of tariffs comes as he balances election-year politics with a fragile geopolitical landscape and growing concerns about the strength of the U.S. economy.
On the one hand, the White House is still working to thaw relations with China after several years of near-frozen communication, in part because former President Trump imposed the first round of tariffs on China that nearly triggered a full-blown trade war.
Tariffs could also raise U.S. manufacturing costs, creating an unintended economic ripple effect that could ultimately lead to higher consumer prices. That would be an unwelcome outcome at a time when Biden is already locked in a years-long battle to fight stubborn inflation and prove to voters that his economic agenda is working.
On Tuesday, a senior administration official dismissed the idea that higher tariffs would lead to higher inflation.
“If these actions are taken, they will not increase inflation, but they will protect U.S. jobs and the steel industry,” the official told reporters. “Residual inflation is not coming from commodities and these actions will not change that.”
On the other hand, the Biden campaign hopes to maintain a hawkish stance on China as it competes with Trump for the votes of blue-collar workers. In that spirit, Biden will also reiterate his opposition to the proposed sale of U.S. Steel to Japan’s Nippon Steel.
“It is important that U.S. Steel remains a domestically owned and operated company,” a senior administration official said Tuesday. “The president will make this clear again. He has told steelworkers that he will support them and he means it.”
About The Author
