We didn’t introduce, it’s not for us to reduce – Newspaper Kommersant No. 162 (7363) of 09/05/2022

Last Friday, the US Department of Commerce said it had no plans to cut tariffs on Chinese imports introduced four years ago under President Donald Trump. The agency requested comments from businesses back in May – during this time, more than 350 companies said they did not want the removal of duties, as the latter allow them to “compete with Chinese companies, invest in new technologies, expand production and attract new employees.”

Recall that the Joe Biden administration announced its readiness to revise tariffs mainly in order to reduce record inflation in the United States – in June it reached 9.1%, which was the highest since the early 1980s. Rising prices were linked to increased post-pandemic activity, supply issues, and higher energy and food prices amid the conflict in Ukraine, but regulators began to talk about the risks of fixing high inflation expectations — it took almost a decade to fight them after the 1973 oil crisis (This required tough measures from the Fed – raising rates, in turn, caused a recession). Now the Fed has not hesitated to tighten policy, and annual inflation in August fell to 8.5%.

The economic effect of the trade war with China is assessed negatively by many analysts (including PIIE), despite the protection of individual manufacturers. Domestic production did not grow enough (including due to higher prices for components that were also subject to duties), and Chinese demand for American products fell due to a retaliatory increase in tariffs – in 2019, China’s exports of goods from the United States were already lower than the base year, 2017 for $13.4 billion.

An attempt to balance trade with China through a trade deal (which was concluded in January 2020 after several rounds of tariff increases) also failed – it did not lead to an increase in exports to China – the country had to increase purchases of goods and services from the United States in 2020-2021 years for a total of $200 billion, but actual deliveries to the country amounted to only 58% of the agreed volume, which is lower than the level before the deal entered into force.

The negative impact on the economy (which, in particular, US Treasury Secretary Janet Yellen referred to), however, is unlikely to become a reason for revising the US administration’s position on trade with China – this is hampered by foreign policy differences and the inability of the White House to influence the rules of the game on the Chinese market – a large-scale influx of investments by American companies in the PRC and the opening of the market for Chinese products was considered justified with weaker competition, but now the US Department of Commerce is likely to continue its policy of restraining Chinese manufacturers.