Breitbart Business Digest
June 24, 2022
The Tariffs Inflation Con
There has been a lot of talk lately in Washington, DC, that the Biden administration might attempt to reduce inflation by cutting tariffs on goods imported from China. The details of such plans remain vague, but Treasury Secretary Janet Yellen is said to favor it while Trade Representative Katherine Tai appears to be opposed.
"The China tariffs are, in my view, a significant piece of leverage and a trade negotiator never walks away from leverage," Tai said in testimony before the Senate Appropriations Committee.
It's understandable that the Biden administration would be scrambling for some policy to reduce prices ahead of the midterm election. Inflation is the top concern among American voters, many blame the Biden administration, and Biden's popularity is in the tank. Democratic lawmakers are begging Biden to do something before they drown in a red wave election this fall. Big business lobbyists are pressing Biden for a repeal of the China tariffs.
There's a fog of unreality about this. Only about one percent of the Chinese products subject to tariffs are consumer goods. When tariffs were imposed, they did not raise consumer prices, probably because most of their cost fell on the margins of Chinese manufacturers and U.S. importers. Lifting the tariffs would not have much of an immediate effect on U.S. prices at all. A review by the Peterson Institute, which is not friendly toward the tariffs, found that a complete repeal of the China tariffs would reduce the Consumer Price Index by 0.26 percentage points. That's a drop in the bucket when we are at 8.6 percent annual inflation.
What's more, a repeal would do absolutely nothing to the two most politically salient parts of inflation: gas prices and food prices. In fact, reducing the tariffs could exacerbate inflation in food and gas because it would free up a bit of money for households to spend at the gas station and grocery store.
– Alex Marlow & John Carney
Breitbart News Network
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