Former US Treasury Secretary – Tariff cuts from the US and China will lower US inflation
Former Treasury Secretary Jacob Liu told reputed news firm on Tuesday that lifting tariffs on goods during the worst trade war would help reduce US inflation. However, he now tells that “there is no political space for him.” “I think there is a deep division between the United States and China. I never thought it had to be about negotiating the exchange of this or that product on one side or the other. It should be an almost equal playing field,” Liu said. He served as Treasury Secretary from 2013 to 2017 in the Obama administration.
He continued, “I thought from the beginning that tariffs were an ineffective way to deal with attacks on American consumers. And now that inflation is an issue, lowering tariffs will actually lower inflation in America.” The two sides have been embroiled in a long-term trade war as the Trump administration’s 2018 tariffs on billions of dollars of Chinese goods deteriorated US-China relations as Beijing responded with similar punitive measures.
According to the Peterson Institute for International Economics, a think tank, US tariffs on Chinese products in early 2021 averaged 19.3% on a trade-weighted basis, while Chinese tariffs on US products were around 20.7% earlier this year. Before the trade war, US tariffs on Chinese products averaged 3.1% in early 2018, while Chinese tariffs on American products averaged 8%. Regarding the withdrawal of tariffs, Liu said: Deteriorate. Moody’s Investors Service reported earlier this year that most of the tariff increases imposed during the height of the US-China trade war is borne by US companies. The rating agency said US importers paid more than 90% of the additional costs resulting from 20% US tariffs on Chinese goods. This is because, according to the report, US importers pay about 18.5% higher for Chinese products subject to this 20% tariff, while Chinese exporters pay 1.5% for the same products. It means paying a small amount. This year has seen a surge in inflation concerns as energy prices soar and supply chain crises continue leading to commodity shortages. The U.S. CPI, which tracks grocery baskets from gasoline and healthcare to groceries and rentals, rose 6.2% year-over-year in October, the highest in 30 years.
Combined with the US-led trade war and the COVID 19 pandemic, rising inflation is becoming an international and domestic issue. It can exacerbate inequality, upset the long-awaited sustainable and comprehensive economic recovery from the COVID 19 pandemic, and endanger Biden’s reelection campaign. The current US inflation crisis recalls memories of former US President Jimmy Carter’s re-election campaign. Carter’s weakness in containing the double-digit inflation crisis of the 1970s was defeated by Ronald Reagan in the 1980 elections, in addition to a 20% interest rate, recession, and a significant revolution in the role of government in the economy. In order to carry out the spirit and consensus agreed at the recent virtual conference between President Xi Jinping and President Joe Biden, lowering tariffs on goods from China is an effective step to combat inflation. There may be a compelling American Biden in the second