Clete Willems, who previously served as deputy director at the National Economic Council, said President Joe Biden could decide “fairly soon” on a modest bailout that would ease some of the US tariffs. China in an attempt to reduce inflation.
“What we’re expecting that the president is deciding on is a relatively modest list of potential tariff deferrals to combat inflation. Some reports indicate it’s as large as 10 billion. dollars of the more than $360 billion currently held by Willems, now a partner of Akin Group, told CNBC on CNBC’s “Squawk Box Asia” Wednesday.
Willems, who served as the White House’s top trade negotiator during the Trump administration, noted that the move is likely to be accompanied by other actions “considered to be tough on China” such as a ” potential new investigation into China’s industrial subsidies.”
“It’s really important for the Biden administration to manage things at home, so they don’t get criticized by China hawks as weak,” Willems said, adding, “I think that’s what I think.” We will soon see some movement. . “
In May, Biden said he can reduce some of the tariffs already imposed against Chinese imports to help control rising consumer prices in the US
The White House is currently reviewing the penalties introduced under the former President Donald Trump – this has increased the price of everything from diapers to clothes and furniture. This process is enabled by the rule of law, not the political willingness of the United States to re-establish relations.
I think the optics are a big part of this and the president has been criticized for not doing much about inflation.
Clete Willems
partner at Akin Group
Long-term strategic goals
Willems said the Biden administration is interested in streamlining the list over a longer-term vision and making it more strategic. That could include a series of tariff cuts as well as perhaps some hikes in areas where they consider it important to achieve their supply chain goals, he added. .
“I think we’re going to see something relatively modest in the short term. But in the long run, what I hope is this will lead to a process of trying to rationalize things more broadly and involve link them more closely to supply chain goals,” he said.
Some economists have estimated Remove tariffs on Chinese imports would eliminate 1% inflation in the US over time and return confidence to the economy. This could help Biden stay ahead of the midterm elections later this year.
“I think optics are a big part of this and the president has been criticized for not doing much on inflation and they clearly wanted to illustrate that they heard that and they,” Willems said. are responding.
Finance Minister Janet Yellen also said some tariffs on China “no strategic purpose” and Biden is considering removing them as a measure to cool down inflation.
“I think there is some recognition within the administration, especially in the Treasury, that these tariffs have not achieved what they wanted to do,” said Benjamin Kostrzewa, an international trade and legal counsel. at Hogan Lovells, told CNBC’s “Street Signs Asia” on Wednesday.
“They haven’t pressured the Chinese government to make the changes they had hoped for at the system level – whether it’s intellectual property rights or subsidies. At the same time, they’ve caused a amount of damage to the US economy.”
Political pressure on tariffs
White House press secretary Karine Jean-Pierre said Tuesday that a decision has not yet been made on tariffs.
“The president’s team is continuing to consider our options for how to move forward,” she said at a news conference. “We want to make sure we have the right approach.”
“Once we figure out the right approach – this is about what works for the American public, for the American people – we’ll have an announcement,” she added.
Kostrzewa, who previously served as assistant general counsel at the Office of the US Trade Representative, said the White House is also facing a lot of pressure from both sides over whether to lift these tariffs. .
“If they lift these tariffs unilaterally, there will be a lot of concern from all political groups from coalitions on the left, to China hawks on the right and left,” he said.
“So it was hard for him [Biden] to make… the right economic move while these tariffs are still prevalent. And it’s unclear whether lifting tariffs will make more of a dent in concerns that inflation is creating economic and political problems for the administration. “
