Reducing the tariffs on imported goods from China, imposed in 2018 by President Trump, through a revived exclusion process could help lower inflationary pressures on the economy, said U.S. Treasury Secretary Janet Yellen on Thursday at the Reuters Next conference.
Yellen said of the Trump-era tariffs that “some of them create problems without having any real strategic justification.” The tariffs on 25 percent of billions of imported Chinese goods “do contribute to higher prices in the United States.”
Last month, ahead of Biden’s virtual summit with Xi, around two dozen business groups urged the U.S. president to work toward removing the trade tariffs. They said that the higher input costs have been passed on to customers and are contributing to inflation.
The letter also mentioned the “respect for rule of law and human rights,” and that the organizations agree “forced labor and other human rights abuses should have no place in supply chains,” some of the issues covered under the tariffs.
Meanwhile, tariffs have had an extremely hard impact on the Chinese economy. During 2018 and 2019, 1,800 U.S.-funded subsidiaries closed down their operations in China, along with multiple foreign subsidiaries including those from South Korea and Germany.
Tariffs have been considered by numerous U.S. presidents as a tool to defend national interests but have been condemned by international organizations like the World Trade Organization (WTO). Since China joined the WTO in 2001, almost 60,000 factories have closed in the United States along with the loss of around 4 million jobs.
Yellen said that the exclusion process is one among several steps the Biden administration is undertaking to lower inflation rates in the country. The Treasury Secretary added that she was working with her Chinese counterpart, Vice Premier Liu He, in a bid to resolve a range of economic issues.
China “could make a big contribution to mitigating global imbalances. These are all topics that we’ve been discussing, and I expect those dialogues to continue.”