Denver, U.S. | Xinhua | Each week, more economists and U.S. policy experts question U.S. President Joe Biden’s delay in dumping his predecessor Donald Trump’s trade war against China, citing the potential benefits being missed.
“Talk about missing the boat … it would slow inflation, stimulate the economy, and send an olive branch to the world’s most populous nation and America’s most important trading partner,” said David B. Richardson, a Seattle attorney and policy analyst during the Reagan administration in the 1980s.
“The Biden administration simply reversing the tariffs could certainly help ease some of the supply-based inflationary pressures,” said Anton Bekkerman, an agronomist and associate dean at the University of New Hampshire’s College of Life Sciences and Agriculture.
Bekkerman told Xinhua Monday that eliminating the tariffs “certainly makes sense from a broader economic activity perspective.”
“Reducing or eliminating those tariffs can certainly be a fiscal policy that could help release one pressure valve that’s causing inflationary impacts,” Bekkerman said.
“What tariffs do is they restrict the quantity of goods that enter the United States, which makes the ‘too many dollars chasing too few goods’ problem, the classic core of inflationary pressure,” he said.
At Montana State University, 3,900 km west of New Hampshire, renowned conservative economist Vincent Smith, a non-resident senior fellow at the American Enterprise Institute, last week called the trade war “another of several major economic follies pursued by the Trump Administration.”
“In 2018, Trump started a trade war with the world involving multiple battles with China as well as American allies,” the Peterson Institute for International Economics (PIIE) recapped earlier this month.
“Each battle has used a particular U.S. legal rationale, such as calling foreign imports a national security threat, followed by Trump imposing tariffs and/or quotas on imports,” the May 10 study said.
The Trump administration’s tariff policy was haphazard, arbitrary and made no sense toward correcting the trade imbalance between the United States and China, according to Smith.
“When the Trump administration placed its tariffs, the U.S. was at about an 800 billion dollars of higher imports than exports. Today, we are nearly double that!” Bekkerman said, noting that the 2022 demand for Chinese products is higher than ever.
“Consumers are trying to buy a lot and much of those goods come from abroad. That is clearly indicative of the very high increase in demand, which, without a sufficient quantity of goods to meet that demand, will drive up inflation,” he added.
Subsequent retaliation by trading partners and the prospect of further escalation risked significantly hampering trade and investment, and possibly the global economy, according to the PIIE study.
Indeed, in 2018, a 100-million-dollar meat packing plant in Montana, and dozens of other joint ventures between the two most powerful world economies, went down the drain due to Trump’s trade war, according to media sources.
“Countervailing tariffs imposed on key U.S. exports (most obviously soybeans) by those countries did the U.S. economy real harm and undercut the long-run credibility of the United States,” agroexpert Smith added.
In a study released earlier this year, the United States Department of Agriculture (USDA) estimated that between 2018 and 2019, the “retaliatory tariffs caused a huge drop in U.S. agriculture exports, to the tune of more than 27 billion USD.”
Soybean farmers in Brazil and Argentina, two of the world’s top four producers, have been banking millions since China dropped the tariff-laden U.S. trade route and went to South America instead, according to World Atlas.
Biden “must now determine whether to keep U.S. tariffs and other trade barriers in place or adjust policies in the wake of changing conditions, as well as the COVID-19 pandemic,” PIIE said.
“Biden’s got to get moving on this, he’s missing a golden opportunity to reverse Trump’s stupidity and steer America in the direction that will ensure our economic stability,” Richardson said.