US Treasury Secretary Janet Yellen’s recent trip to China has sparked hopes in Beijing that the Trump-era tariffs on Chinese imports may be eased as she works to improve relations between the two countries. However, strong anti-China sentiment in the US may make it difficult for Yellen to make any significant changes to the tariffs.
Trade and political analysts in Washington believe that while reducing some of the “Section 301” tariffs would benefit US companies, consumers, and Chinese exporters, it would expose President Biden to criticism from Republicans. The political climate in the US is currently fueled by anti-China sentiment that has been growing over the past four years, largely due to former President Donald Trump’s policies towards China.
During her visit, Yellen held extensive discussions with China’s top economic officials and Premier Li Qiang, addressing trade issues and policy differences. The topics included US tariffs and high technology export controls, as well as Beijing’s new anti-espionage law that poses a threat to US companies operating in China. While Yellen did not publicly indicate any plans to ease tariffs, commentators in China remain hopeful, especially in light of an ongoing review by the US Trade Representative.
China’s Finance Ministry released a statement calling for the US to cancel punitive tariffs, roll back export restrictions, and end import bans from Xinjiang province. Hong Hao, CEO of Grow Investment Group in Hong Kong, believes that Yellen will have a say in the next phase of the US’s four-year tariff review and that a reduction or exemption of non-core tariffs against China is possible, even if technological curbs remain in place.
However, there is growing political pressure in the US to increase tariffs on China. Chad Bown, a trade economist with the Peterson Institute of International Economics, states that there is no political appetite to reduce tariffs on China, and Yellen would be successful if she manages to maintain the current tariff levels.
US officials have not provided any specific response to China’s call for action, stating that no new initiatives are currently underway. The US Treasury declined to comment on tariffs, while the US Trade Representative continues to review feedback received during the public comment period, which closed nearly seven months ago.
According to US customs data, collections of US tariffs on Chinese goods reached a peak of $49 billion in fiscal year 2022, bringing the total amount collected from US importers over the past four years to $182.9 billion. Although US imports from China had nearly reached their 2018 peak in 2022, they have declined by 24% so far this year.
In the US, hardliners within the Republican party, who dominate discussions on China, took to social media to mock Yellen for appearing to bow to Chinese Vice Premier He Lifeng at the start of their meeting. Republican Senator Josh Hawley criticized Yellen’s actions, calling it “embarrassing groveling to China.” Republican presidential hopefuls, including Florida Governor Ron DeSantis and former UN Ambassador Nikki Haley, have adopted confrontational rhetoric towards China, viewing it as the US’s top geopolitical foe. They have proposed specific plans to confront China on trade, including revoking China’s permanent normal trade relations status.
Former President Donald Trump, who currently leads the Republican field, stated that he would give China 48 hours to remove alleged Chinese spy capability on the island of Cuba, located 90 miles off the US coast. If China fails to comply, Trump’s administration would impose new tariffs.
In conclusion, while there are hopes in China that the US may ease tariffs on Chinese imports, the strong anti-China sentiment in the US and the political pressure on President Biden make it unlikely that any significant changes will be made. The outcome of Yellen’s trip and its impact on US-China relations remains to be seen.
Reporting by David Lawder, Andrea Shalal; Additional reporting by Gram Slattery and Jeff Mason. Editing by Heather Timmons and Nick Zieminski
What are the potential implications of Yellen’s visit to China on the ongoing review of China’s trade policies?
Ntative’s office stated that the review of China’s trade policies is still ongoing.
Overall, while there is some hope in China that Yellen’s visit may lead to a reduction in tariffs on Chinese imports, the strong anti-China sentiment in the US may make it difficult for any significant changes to be made. The political climate, fueled by the policies of the previous administration, make it unlikely that the Biden administration will take immediate action to ease tariffs. However, analysts believe that Yellen may have a say in the ongoing tariff review and that a reduction in non-core tariffs against China is possible, despite the continued technological restrictions in place. Ultimately, the outcome of Yellen’s efforts to improve US-China relations and address trade issues remains uncertain.
Yellen’s visit to China is a promising step towards tariff easing, but navigating through political challenges remains a major hurdle to overcome.