Biden administration to rethink Trump-era China tariffs

Yahoo Finance Contributor Kevin Cirilli joins Yahoo Finance Live to discuss the Biden administration evaluating Trump-era tariffs on China and what that means for trade.

Video transcript

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AKIKO FUJITA: Well, the Biden administration is reportedly rethinking the plan for tariffs placed on Chinese goods. That's according to a report out from Reuters. The tariffs make Chinese imports more expensive, leaving lasting impacts on US companies and consumers. For more on this, let's bring in Yahoo Finance's contributor Kevin Cirilli, joining us from DC this morning. Kevin, what are you hearing on the ground? I mean, I feel like this has been such a long process with the administration reviewing these tariffs.

KEVIN CIRILLI: You know, it really has, Akiko. And to be completely candid with you, after House Speaker Nancy Pelosi's successful trip to Taiwan and then you've got the Communist Party of China doing those largely expected military exercises, that's provided a new wrinkle in the ongoing saga of whether or not the US will continue those Trump era trade tariffs. Remember, it's about $370-380 billion worth of tariffs.

But let's focus specifically on the tariff exclusion list because the previous administration compiled a list of about 2,200 tariff import categories that were excluded from the tariffs against China. But they expired in January of 2021, and only 352 have been reinstated under the Biden Administration.

Now, when President Biden took office, you had 140 lawmakers, bipartisan lawmakers, write a letter to trade representative Tsai in which they urged for those exclusions to continue. And they wrote, quote, "The lapse and continued absence of critical exclusions have deepened the challenges for businesses and their workers, hindering efforts to relocate supply chains in sectors ranging from new- energy vehicles to semiconductors by raising the costs of critical inputs, components, and machinery." So on the one hand, the lawmakers want to be tough on China. But they don't want to do so at the expense of the American worker.

AKIKO FUJITA: Well-- and so, Kevin, you know, that, in many ways, has reportedly been causing a rift within the administration. To your point, you've got those like USTR, maybe the State Department that said, we have to continue this pressure on China, and then others like the Treasury, which has said, well, the inflation impact is-- you know, it is significant enough to consider removing them. So what exactly is that impact?

KEVIN CIRILLI: Well, Akiko, I was just up on Capitol Hill yesterday talking with staffers and sources, and this has really dominated, in geopolitical circles, the talk of the global business community but really in terms of finding that balance that you're alluding to of making sure that the tariffs that are imposed against China don't negatively impact American workers. But you mentioned inflation, and that is top of mind for policymakers. Obviously, the Inflation Act that's anticipated to pass the House of Representatives on Friday, the administration is hoping will lower inflation.

They did get a good CPI report yesterday that would suggest that some of the inflation has decelerated. But that was largely due not because of the tech sector or China, but largely because of oil and energy. And so, again, another missing piece in a component. But it comes at a time in which President Biden is facing really low approval ratings for his handling of inflation.

According to a new ABC News Ipsos poll that was just released earlier this week, just 29%-- 29% of Americans approve of President Biden's handling on inflation. So the argument from, again, that bipartisan group of lawmakers that expanding the exclusion list or even just returning it to the Trump era exclusion list-- that that would potentially combat inflation-- is definitely weighing on the likes of Secretary Raimondo as well as, as you mentioned, Secretary Yellen as well.

AKIKO FUJITA: Yeah, the administration and certainly lawmakers also eyeing that midterm election to--

KEVIN CIRILLI: And it's a balancing act. It's a total balancing act. And it's tough, especially right now, when you've got China doing those military exercises.

AKIKO FUJITA: Yeah, it certainly complicates the decision making internally. But we're going to be watching that one closely. Kevin, as always, appreciate you hopping on today.