President Biden, in a meeting in the Oval Office last week with key members of his cabinet, indicated he was learning how to remove some products from the Trump administration’s list of tariffs in China, people familiar with the matter told Axios.
why does it matter: With inflation soaring to a 40-year high of 8.6%, Biden and his top officials are desperate to show price-cutting measures, even if it makes them look weak in China.
- Inflation is eating away at the purchasing power of low-income Americans – and undermining the political fortunes of Democrats ahead of the midterm elections. While the Federal Reserve is the nation’s primary inflation firefighter, tariffs that now cover $350 billion in goods imported from China is one area in which Biden can act unilaterally to comfort American consumers.
- But Biden’s plans to exempt some products covered by Trump’s tariffs under Section 301 risk exacerbating the labor movement.
- News leadership: Biden is scheduled to address the AFL-CIO Constitutional Convention in Philadelphia today, with remarks celebrating their partnership.
- But in private conversations with administration officials, labor representatives warned the White House against easing any of the tariffs.
What we hear: Biden is leaning toward ordering the Office of the United States Trade Representative to conduct a formal “exceptions process” to determine whether certain consumer items, such as bicycles, should be exempt from the Section 301 tariff. He is unlikely to include large industrial items, such as steel and aluminum, in these the operation.
- Biden gave some hints of that thinking last Tuesday in a meeting with top Cabinet officials, according to people familiar with the discussions.
- A possible announcement is expected early this month.
- “No decision has been made,” a White House spokesman said. “The president is discussing with his team ensuring that tariffs are consistent with our economic and strategic priorities, such as protecting the interests of workers and critical industries, enhancing our national security, and not unduly increasing costs to Americans.”
The Big Picture: Labor officials put Biden in a political notice last week that they expect him to keep all Trump tariffs in place, writing that “our government must act in the national interest to strengthen our economy in the future.”
- For most of his presidency, Biden was reluctant to let any daylight enter between him and the labor movement, which forms the backbone of his political coalition.
- How angry the unions will be will likely depend on the number of items Biden exempts and the total dollar amount.
- Some labor officials were frustrated by Biden’s decision last week to use his emergency powers to waive any potential trade sanctions for solar developers to import panels from Southeast Asia.
Between the lines: The overall effect of removing all Trump tariffs on imports from China could, according to one study, reduce the Consumer Price Index (CPI) by just 0.26 percentage point.
- This sparked a fierce internal debate, pitting economic officials against other key members of the administration, such as US Trade Representative Catherine Tay, who wants to maintain influence over China.
recovery: For months, officials privately discussed the political and economic advantages of lifting some of Trump’s tariffs, with Biden telling reporters in Japan in late May that he was “considering” rolling back some of them.
- “We have not imposed any of these tariffs,” he said. They were imposed by the previous administration and they are under study.
Bottom line: White House officials are depressed and resigned to the prospect of significant price cuts before November. Biden is deeply frustrated with his team’s proposed headlines for exorbitant gas prices.
- He recently questioned the value of heading to Iowa to promote biofuels to help lower gas prices, the Washington Post reported, and summoned his chief of staff, Ron Klein, to the Oval Office.