U.S. Trade Representative Katherine Tai argued on Wednesday that President Joe Biden’s fresh China taxes are not only worthwhile, but that they will also prevent any price increases.
When asked if prices would rise in response to Donald Trump‘s tariffs, she responded,” First of all, I think that the relationship between tariffs and costs has been mostly refuted.
If thus, that’s reports to academics.
The Washington Examiner spoke to three economy experts, all of whom disagreed with Tai’s statement.
” Taxes are sales fees on imported products”, said Douglas Holtz- Eakin, original producer of the Congressional Budget Office. ” Income taxes are the subject of a lot of research, and they significantly increase the price that customers pay. Period”.
He claims that “what she said is misleading” because the Biden White House is cautious about giving the impression that its activities will raise rates even higher than they have now.
” It has not been debunked”, Holtz- Eakin, then president of the American Action Forum, said. ” The opposite is true”.
After leaving most of Trump’s China tariffs in place, the , Biden administration  , has announced it will raise tariffs on certain Chinese steel and aluminum products from 7.25 % to 25 % this year, on Chinese electric vehicles from 25 % to 100 %, and on semiconductors from 25 % to 50 % next year.
Although the trade-offs could be justified by more American manufacturing and a lessening dependence on a hostile foreign power, Gerald Friedman, an economist at the University of Massachusetts Amherst, believes that the notion that price increases wo n’t increase is untrue.
Friedman is a self- described Trump supporter, but could not obey the claim.
” When you put taxes on, you raise rates”, he said. ” You reduce competition. And that raises costs. Sometimes that’s a good thing anyhow! But do n’t bulls *** us”.
China has made strides in the growing field of electric vehicles, offering a small EV that received , praise , from the , Associated Press , for as little as$ 10, 000 brand new. However, when Biden’s tariffs become in effect, that car will cost at least twice as much.
According to Friedman, the low rate is precisely what the tax is meant to achieve.
” If that stuff was n’t cheaper, nobody would be buying it anyway. You would n’t need the tariff”, he said. ” I do n’t know any economist who would say otherwise”.
The rest of Tai’s response addresses some of the difficulties Friedman and Holtz-Eakin have raised.
She said,” What the president has instructed us to do is concentrate on strengthening our provide bars.” ” That means we need more choices. That means these in America, we need to have more production power”.
Taxes may help, but at rates that are appropriate for domestically produced goods and employee pay.
A second scholar, the Bipartisan Policy Center’s Bill Hoagland, offered a more complex answer hinging on whether Tai meant rates on items subject to the price or rates overall.
” Those who have studied it carefully, e. g., Economic Policy Institute, the Peterson Institute for International Economics, ]found ] that tariffs have had a small, negligible impact on inflation”, he said.
” On the other hand”, Hoagland added, “if I were in the market for an Vehicle, evidently the China EV would reduce my charge. If many of us were in that industry, higher prices may result from the latest price today.
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Even if tariffs do raise prices for at least some of the products sold, Biden’s election does not suffer as a result.
Trump supported levies in the 2016 presidential election and put them into effect. He is now proposing a 10 % common tax that applies to all goods imported from foreigners.
