Lifting Tariffs Rewards China, Fails to Ease Inflation
By NCTO President & CEO Kimberly Glas
People are desperate. Inflation is causing pain as it eats away at household budgets. But in our desperation to do something about it, we shouldn’t grasp at solutions that would have no real impact and, in fact, would be counterproductive.
Yet that’s what some are now proposing as they call for lifting penalty tariffs placed on Chinese imports. Yes, at first glance, it may seem like an easy and quick step to take in desperate times, when there are few simple remedies at hand. But we shouldn’t fool ourselves. Removing tariffs now would not make any real difference to the inflationary pain Americans are feeling, and it would set us back a long way in our fight against China’s predatory trade practices. In fact, certain retailers recently said removing tariffs would likely have a negligible effect on lowering retail prices. Barclays noted the same in their recent analysis.
What is at stake and under active consideration now are the tariffs, imposed in 2018 under Section 301 of U.S. trade laws, to penalize China for a whole range of predatory trade practices. Now, at the four-year mark after their imposition, the U.S. Trade Representative is required by law to review whether they should remain in place.
Opponents of tariffs have grabbed on to this mandatory review and hope to use inflation as the excuse for removing them. We shouldn’t fall for that ruse. Lifting tariffs would fail to ease inflationary pressures, and it would open the floodgates to more Chinese imports and show that the United States isn’t serious about addressing China’s trade abuses.
Tariffs didn’t cause our inflationary woes. These tariffs were in place for nearly three years before inflation took hold. In fact, average U.S. apparel import prices from China have dropped significantly and are down 25 percent since 2019 and 50 percent since 2011.
Households are feeling the most pain from rising gas, food and housing prices, not the tariffs.
Further, let’s not lose sight of why the tariffs were imposed in the first place. China’s illegal trading actions have harmed nearly every American manufacturing sector and cost us millions of U.S. jobs and hollowed out whole communities. China’s “devastating state-sponsored practices include intellectual property theft as well as pervasive state-ownership of manufacturing, industrial subsidies, and abhorrent labor and human rights abuses in the Xinjiang region,” three textile organizations representing companies that are part of a domestic industry employing 530,000 workers said recently in an official submission opposing the lifting of tariffs on finished textiles and apparel imports from China.
The joint textile industry submission to the Office of the U.S. Trade Representative further noted that lifting the tariffs now also would “threaten to reverse the once-in-a-generation nearshoring trends that are bringing supply chains back to the U.S. and Western Hemisphere.” Our regional trade agreements, which have unlocked historic levels of investment, would be undermined if we prematurely suspend tariffs without achieving policy reforms in China.
And U.S. textile, apparel and other manufacturers are not alone in calling for the tariffs to remain in place. Labor leaders have pointed to the loss of jobs the move would trigger. And a bipartisan group of senators spanning the ideological spectrum wrote President Biden that, “Rolling back the tariffs on China would undermine the U.S. position in negotiations. . .and signal to China that waiting out the United States is preferable to changing their non-market behavior.”
Negotiations with China continue as we seek to address longstanding trade violations and its failure to comply with the Phase One agreement it made with the United States in 2020. U.S. Trade Representative Katherine Tai has emphasized that the tariffs provide the United States with needed leverage in those talks.
Alarmists say tariffs block the importation of hard-to-get products. Yet, it’s the over concentration of production in China, fueled by unfair trading practices, that has been a key driver of these very shortages. China’s monopolization of numerous industries has been uncovered as purposeful and strategic, with devastating consequences, as in the case of PPE. Backing down on policies like the 301 tariffs is antithetical to addressing our supply chain woes.
Instead, very targeted exclusions are appropriate on certain inputs or machinery that have very limited sources of availability to help domestic manufacturers compete and create more onshoring and nearshoring. A broad rollback of the penalty duties is simply not the answer.
Today, we must stay the course and hold China accountable. That starts with rejecting the false promise that repealing tariffs will make inflation or product shortages go away. Instead, we must remain tough on China and stand up for American manufacturers and workers.
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Kimberly Glas is the president and CEO of the National Council of Textile Organizations and is an appointed commissioner to the U.S. China Economic and Security Review Commission, and former Commerce deputy assistant secretary for textiles and apparel.
