While touring the crucial battleground state of Pennsylvania, President Joe Biden is urging the U.S. Trade Representative to triple the tariff rate that China imposes on imports of steel and aluminum.On Wednesday, the president will visit the United Steelworkers headquarters in Pittsburgh.
Treasury Secretary Janet Yellen expressed concern last week during a visit to China that Chinese subsidies were causing an excess supply of clean energy products, such as electric cars and solar panels, that would surpass domestic demand. She was concerned that excess capacity might be pushed onto international markets at inflated costs, which might discourage competition.
Yellen stated in an interview with Sara Eisen of CNBC that tariffs were a possibility if those concerns about overcapacity remained unresolved.
Since then, Chinese officials and state media have refuted the claim of overcapacity, claiming that the country’s plentiful supply of clean energy products is the consequence of “continuous innovations” rather than government handouts.
The Biden administration is intensifying its efforts to counter what it sees as China’s overcapacity concerns regarding global trade.
Director of the National Economic Council Lael Brainard warned that “China’s policy-driven overcapacity poses a serious risk to the future of the American steel and aluminum industry” during a Tuesday call with reporters. “China cannot rebuild itself through exports. China is just too big to follow its own regulations.”
Biden’s delicate balance
In light of a precarious geopolitical environment, election-year politics, and growing apprehensions about the health of the US economy, Biden has intensified his efforts to raise tariffs.
On the one hand, following several years of almost nonexistent communication due in part to former President Donald Trump’s initial round of tariffs on China that nearly started a full-fledged trade war, the White House is still trying to thaw relations with China.
Tariffs may also have unintended consequences on the economy by increasing the cost of manufacturing in the United States, which could eventually result in higher consumer prices. That would be an undesirable outcome at a time when Biden is already engaged in a protracted fight to curb rising prices and convince voters that his economic plan is effective.
On Tuesday, a senior administration official denied the idea that higher tariffs would cause inflation to increase.
In a call with reporters, the official stated, “If taken, these actions will not increase inflation, but they will protect American jobs and the steel industry.” “These actions will not change the fact that goods are not the source of residual inflation.”
Conversely, the Biden campaign hopes to keep up its tough posture toward China in order to compete with Trump for the support of blue-collar workers. In keeping with that, Biden will also state again how opposed he is to the planned sale of U.S. Steel to Nippon Steel in Japan.
A senior administration official stated on Tuesday, “It is important that U.S. Steel remains a domestically owned and operated company.” “The president will clarify that once more. He truly does mean it when he promises to protect the steelworkers.”
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