The U.S. Business Roundtable, the Chamber of Commerce, the American Farm Bureau, the Semiconductor Association, and several other major U.S. business groups have just asked that President Joe Biden reduce U.S. tariffs on imports from China and negotiate a new trade deal with Beijing.
These groups explain that they are making this request because the tariffs have resulted in higher prices that are harming consumers and the big corporations want to do all they can to help U.S. consumers.
But wait a minute. The American Farm Bureau’s members and customers don’t import much, if anything, from China. They export a lot to China, but China isn’t a significant exporter of agricultural goods. Is the bureau really concerned about the prices American consumers are paying for imported foodstuffs? Indeed, according to the official consumer price index, U.S. food prices are up less than 2 percent over the past year.
It’s just very difficult to believe that the Farm Bureau is terribly concerned about rising U.S. food prices spurred by tariffs.
But maybe the farmers are an exception. Let’s look at the semiconductor industry. It’s a big importer as well as an exporter of semiconductor chips. Its sales are up about 20 percent this year, and according to Kiplinger Advisors, it is swimming in huge profits. Now, it’s true that there are tariffs on some imports of semiconductors from China. However, given the immense profits the makers are accruing, it would be easy for them to reduce prices to help consumers if they think consumers are hurting too much. Even with reduced prices, they would still be making extraordinary profits. Interestingly, none of the semiconductor companies who are so solicitous of consumers paying high prices have offered to lower their own prices, despite making record earnings.
All of this suggests that there is something aside from consumer prices driving this industry demand to the president for reduction of tariffs on imports from China. What could it be?
The farmers don’t care about consumer prices on any imported food from China. Their hope is that a deal with China would lead Beijing to reduce the tariffs it imposed on imports of U.S. agricultural products in response to former President Donald Trump’s raising of tariffs on imports into the United States from China. They want to sell more to China. It doesn’t bother them that the Chinese regime is crushing freedom in Hong Kong and conducting genocide against the Uyghurs of Xinjiang and threatening to invade Taiwan. They just want to sell and make more money.
The semiconductor industry, the Business Roundtable, and the U.S. Chamber of Commerce are more complex and more interesting. Remember that they are businesses whose leaders have been schooled to believe that their only responsibility for their corporations is to make profits for shareholders and, of course, for themselves. They are all making record profits now. If they were truly and greatly concerned about consumer prices, they could all afford to reduce their prices. They would still be very profitable. But they are also not really worried about consumers. Many of them want to increase their profits by holding prices level while reducing their costs by dint of having the tariffs reduced.
But there is another, perhaps more important, angle. Most of them do a lot of business in China by producing there and selling there or by having their production done there and importing from China. Apple is a good example. Everything it sells in the U.S. market is made in China. Or take Walmart. Virtually everything it sells in America is made in China also.
Now, if you have been following events in China recently, you know that Xi Jinping and the Chinese Communist Party (CCP) have been cracking down on big Chinese corporations and CEOs. You know also that the Party has enormous power to coerce not only Chinese corporations but also foreign corporations operating in China. The Party could bankrupt Apple or Walmart or many others at the flick of a switch. The CCP wants the United States to remove the tariffs in order to supercharge Chinese exports as a way of regaining growth for the Chinese economy in the wake of the COVID-19 pandemic.
It should be clear to any close observer of the scene that what lies behind the new calls for lifting the tariffs isn’t so much the U.S. corporations as the CCP. The corporations are hostage to the CCP and are willing and able to challenge the U.S. government on its behalf. They are the Washington Lobby for Beijing.
