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Opinion Biden might be on the verge of making a blunder with China

Chinese President Xi Jinping and Vice President Joe Biden walk down the red carpet on the tarmac in September 2015 during an arrival ceremony at Joint Base Andrews in Maryland. (Carolyn Kaster/AP)
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The goal of President Biden’s five-day trip to South Korea and Japan is to show that the United States is committed to the region and to standing up to China.

But some U.S. officials and business interests are calling on Biden to give Beijing a huge, unearned economic concession, claiming it will help the U.S. economy. Such a step would be a mistake politically, economically and for U.S.-China relations.

Given the dire effects of price increases on Biden’s poll numbers at home, it’s little wonder the president is looking for ways to address the inflation crisis. Enter the Treasury Department, the business community, Wall Street and the Chinese government with a simple plan: Get rid of some tariffs President Donald Trump slapped on Chinese products, which included everything from consumer goods to industrial machinery.

Biden’s top national security officials believe that removing the tariffs now would give away any remaining leverage Washington has on Beijing to curb its unfair trade practices and live up to its economic commitments. The China “competitors” are backed by Biden’s labor allies, who argue such a move would come at the expense of American workers, a constituency Biden is normally unwilling to ignore.

The internal administration battle has now spilled out into public view, with the Treasury Department in favor of removing some tariffs, and parts of the National Security Council and the Office of the U.S. Trade Representative opposed. Biden is expected to decide soon.

Treasury Secretary Janet L. Yellen said Wednesday that removing some of Trump’s China tariffs could have a positive effect on inflation as well as “benefits to consumers and firms,” because they “aren’t very strategic.” To be sure, some specific U.S. industries would get some relief, and there’s no doubt Trump’s crude approach could use some ironing out.

In the main, today’s inflation is caused by many things — Russia’s invasion of Ukraine, the resulting energy crisis, the food crisis, the lingering pandemic — but Trump’s China tariffs are not among them.

Data from the Bureau of Economic Analysis supports the argument that removing some of these tariffs would have little, if any, measurable effect on inflation. The benefits to consumers are illusory.

Biden might claim removing the tariffs benefits American consumers, but they won’t notice any difference. The main benefit would go to firms with large operations in China, because lifting the barriers would remove an irritant in the U.S.-China relationship.

“The Treasury Department represents the financial community, and the financial community wants to get rid of the tariffs because they will get treated better by the Chinese government regarding access to the Chinese market,” said Derek Scissors, senior fellow at the American Enterprise Institute.

Indeed, Beijing makes no secret of its desire to end the tariffs. That should tell us something; they do represent some leverage. China is not living up to the “phase one” trade deal Trump struck with Beijing in 2020 and is becoming more economically aggressive as its power grows.

Finally, it’s irresponsible from a negotiating standpoint: One might not like how the tariffs came to be, but why remove them for nothing?

In Tokyo, Biden will unveil his long-awaited Indo-Pacific Economic Framework, a package of ideas and initiatives meant to convince Asian governments that the United States is serious about trade and investment in Asia. China has been pressuring Asian countries not to sign up. If Biden surrenders on fighting China’s unfair economic practices now, that sends exactly the wrong message to the region at exactly the wrong time.

This month Biden backed down from his previous promise not to unilaterally lift tariffs unless China’s behavior improved. In his May 10 news conference on inflation, he confirmed he is considering the move, saying, “We’re looking at what would have the most positive impact.”

Abandoning the China tariffs is a huge political loser. Whatever credit the administration gets for “doing something” on inflation will be far outweighed by the backlash from organized labor. And if Biden cuts tariffs and the trade deficit with China continues to rise, Republicans will use that to go after those voters.

“Claiming to have a foreign policy for the middle class or a worker-centered trade policy requires the support of American labor,” Michael Wessel, staff chair of the trade representative’s labor advisory committee, told me. “The administration doesn’t get to define what those policies mean, labor does.”

As China’s economy struggles under the erratic policies of its dictatorial government, Washington should be helping U.S. companies get out of China, not helping them to get in. We should do more to confront China’s economic aggression, not less. The good news: There’s still time for Biden to avoid this penny-wise, pound-foolish idea.

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