Prof. ST Hsieh
Director, US-China Energy Industry Forum
July 19, 2022
It is a very good question, but President Biden needs to make up his minds as well as take appropriate action. Biden’s popularity, as President, is bottom less. It is not because his administration promised too much, rather it is because we do not see many actions with consequences. The world is in trouble, European nations may face a recession soon. The US economy is in bad shape with record inflation along with slowing growth. But President Biden has not made any major moves. US-China relation needs a re-set but Trump’s tariff war with China has to be resolved first. Unfortunately, President Biden has been weighing his decision after nineteen months in office.
Since Biden’s inauguration in January 2021, he and senior members of his administration have insisted that, in spite of intensifying competition, cooperation with China is possible and even preferable. However, observers have questioned the viability and coherence of this posture in light of the U.S.’s pledge to continue confronting China on fundamental issues such as human rights as well as military and economic coercion against countries with views that diverge from those in Beijing. Crucially, China has made clear its own position on what it sees as Biden’s attempt to have his cake and eat it too.
With the 2022 mid-term election only 111 days away, Biden will have to make up his minds quickly, because the Democratic party will face a major defeat in Congress. After November 8, 2022, Biden will be essentially powerless. So, what is Biden waiting for? What does Biden get to lose if he makes any decision now?
Indecision on China is costing Americans
Jason Oxman July 19, 2022, Opinion Piece on Fortune
The tech industry had high ambitions for a U.S.-China trade deal when the Trump Administration announced a Phase One agreement in 2020. But despite that early step and even with a change in administration and a new focus on global engagement, the U.S.-China trade war continues, costing Americans $129 billion and counting.
With reports that the President is yet again weighing the next steps on these costly tariffs and that a decision is imminent, the Biden Administration should address the growing U.S. economic crisis by removing legacy tariffs that are raising prices and harming U.S. companies.
These tariffs have taxed U.S. consumers and undermined global commerce. The previous administration justified the tariffs by claiming (incorrectly) that China paid them. The current administration apparently needs reminding that Americans have paid dearly, with tariff-related costs reaching $1,200 annually for an average family. That was unacceptable in the past, and today, rising inflation makes it untenable.
Critically, the China trade deal afforded the Biden Administration a clear opportunity to rescind the tariffs on Chinese goods implemented by the previous administration by using its current Section 301 investigation.
President Biden campaigned on implementing a comprehensive, strategic, and coalition-based approach to China that benefits the U.S. economy, U.S. workers, and the supply chain. However, published reports of conflicting internal opinions within the administration suggest that the current prevailing view is that tariffs are necessary to create a robust China strategy. While tariffs may be a hypothetical future bargaining chip, the deleterious impact of such tariffs on a U.S. economy in crisis is already being felt across the board.
With costs on the rise, the administration cannot keep kicking the can down the road. It is past time to implement a new approach to China, starting with tariff relief.
With China’s role in global manufacturing, any adjustments to bilateral trade have outsized effects. Charging tariffs as high as 25% on some imports hikes consumer costs up.
For the tech industry and its customers, tariffs came at a steep price. Information and communications technologies depend on imported goods like sensors, switches, routers, and semiconductors, and are therefore subject to these unnecessary taxes.
The truth is manufacturing technology products is a global effort. Even when designed by U.S. companies or on U.S. soil, most products require components built elsewhere, and many elements needed for the boldest infrastructure projects must come from overseas.
The economic harm of maintaining these costly tariffs is compounded by the administration’s move to block globally sourced equipment from the recently enacted broadband infrastructure law, which was designed to reach tens of millions of unserved Americans with critical broadband access but is at risk because of administration trade policies.
The prior administration (correctly) moved to block Chinese-owned equipment from broadband networks. But the current administration shockingly blocks equipment from allied nations, trading partners, and even U.S. companies that globally source parts unavailable in this country. Like tariffs on imported goods, these “Buy America” policies sound good as talking points but have a real impact on prices, in this case by raising the costs of broadband deployment by 25%.
The tech industry’s products and services kept the world moving during the pandemic’s darkest days. Continued internal deliberations and proclamations from the White House of a China strategy that does not address important trade issues and economic realities are adding up to missed opportunities and lost momentum, especially as inflation hits Americans’ pocketbooks.
It is time for President Biden to do what is right for average Americans: Get rid of the tariffs, stop erecting barriers to global trade, and transform China strategy ambitions into real policy that will benefit U.S. consumers, companies, and the economy.
The pieces are all in place to end these costly tariffs once and for all: demonstrated need and impact, bipartisan support, and an American public asking for relief. What are we waiting for?
Jason Oxman is the president and CEO of the Information Technology Industry Council (ITI).