Shang-Jin Wei | Columbia University’s Graduate School of Business and School of International and Public Affairs; former Chief Economist of Asian Development Bank
BIG IDEA | ‘President Joe Biden has to decide whether to rescind his predecessor’s China tariffs.’
‘He has three strong reasons to ditch the tariffs:’
1. ‘They have hurt American workers and firms: The higher tariffs fed through almost entirely into higher prices paid by American consumers.’
2. ‘Failed to reduce the overall US trade deficit: the US trade balance saw no improvement from Trump’s tariffs.’
3. ‘And arguably further weakened respect for global economic rules: Repealing Trump’s tariffs on Chinese goods is essential to reviving confidence in the global trading system.’
‘The longer the Trump tariffs remain, the longer America’s middle- and low-income households will have to bear the burden.’
‘But Biden will not rescind the tariffs because he needs to protect himself from accusations of being too soft toward America’s main global rival.’
My Take
Besides wanting to avoid more 'Beijing Biden' from the Republicans, Mr. Biden also wants to take care not to signal to China that is not resolute.
Also, as Dr. Wei points out, President Biden could offer to reduce or eliminate tariffs in exchange for some concrete actions on Beijing's part. The difficulty here is that during the Phase One talks, with the threat of tariffs and uncertainty about their impact hanging over him, Mr. Xi still gave little. Tough to see what he would be willing to do now that China has demonstrated that its economy can prosper with the tariffs on.