WASHINGTON – Here’s one thing Republican Rep. Peter Stauber and Democratic Sen. Tina Smith can agree on: President Joe Biden should not drop Trump administration-imposed tariffs on Chinese steel.
Biden could drop some tariffs on goods worth $350 billion that the United States imports form China to combat inflation. President Obama is expected to announce his decision about tariffs within the next few days or weeks.
To the relief of Minnesota’s steel industry, workers, and lawmakers, Biden will likely keep Trump-era tariffs for imported steel as well as aluminum. Because it prevents the Chinese-made steel price from falling, the tariffs will be in effect to keep the domestic steel price and its key component, iron ore, from rising.
Trump’s support for the imposition of 25% tariffs against Chinese steel is one example of his policy Smith.
Smith stated that China had cheated on international steel production agreements, putting Iron Rangers out work, and threatening our national security for too long. “Steel tariffs can be a crucial tool to counter China’s unfair trade practices. Strong tariffs are necessary to protect American workers as well as our domestic steel industry.
A University of Minnesota study found that Minnesota’s mining sector grew 37% between 2009-2018, adding 1,138 jobs. The report also stated that the Arrowhead region’s mining sector contributed more that $2 billion to its economy in 2018. It also indicated that taconite production, a type iron ore mined in Minnesota, grew after the imposition of tariffs on Chinese steel.
After an investigation that concluded China had stolen intellectual property from American companies, Trump placed tariffs on Chinese exports and required them to transfer technology.
However, the tariffs did not seem to convince China to change its ways. The Chinese responded by imposing duties upon a wide variety of U.S. exports including wheat, wine, and pork, as well as other American products.
Biden’s administration now claims that Chinese-made consumer goods are fueling inflation, causing consumers to pay more money for appliances, bicycles and other made-in China products. However, the strong opposition from the unions and the industries to retain some tariffs has forced the Biden administration into a cautious, limited approach. They plan to maintain tariffs on steel and aluminum.
Stauber, who is a member of Minnesota’s 8 th District, wrote recently to Biden expressing concern that his administration would reconsider “further removing tariffs on China, including tariffs on steel and aluminium imports, as well as steel-intensive imported goods.”
Stauber wrote, “Simply put, your decision not to end these tariffs will have a devastating direct and immediate effect on these very families, workers in northern Minnesota, and throughout the steel country.”
Biden officials, including Treasury Secretary Janet Yellen (and Commerce Secretary Gina Raimondo), have pushed for greater tariff relief. Some argue that it is important for Biden, including Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo to show voters before the midterms that he is working to combat rising prices.
Certain American industries also lobbied to end Chinese tariffs. American beer and soft drink manufacturers, for example, have asked the administration to remove tariffs on imported aluminium.
However, those who want to see a wider end to tariffs on Chinese goods seem to have been outmatched by the nation’s labor unions including the United Steelworkers. They demand that the steel and aluminum tariffs remain in place. Biden is proud of his relationships with union leaders and organized labor, and has made every effort to not cross them.
Monica Haynes, director of Bureau of Business and Economic Research, University of Minnesota-Duluth said that the state mines approximately 75 percent of iron ore in the country. She stated that if tariffs are not lifted on Chinese steel imported from China, it will benefit the state industry.
Haynes stated, “Obviously anything that benefits steel industry will also benefit iron ore industry.”
The economist said that a tight approach to lifting tariffs would not be effective in fighting inflation.
Haynes said, “I cannot imagine these changes having a lot impact.” She also said that any inflation impact might not be felt for several months.
Haynes stated that besides the Federal Reserve’s decision not to raise interest rates in order to cool down the economy but, the removal of tariffs on popular, imported consumer goods from China was “one the few levers” the administration has to fight inflation.
The administration could impose new tariffs against China in addition to reviewing existing tariffs for Chinese goods and raw material. This may adversely affect inflation.
Biden’s administration will announce a new tariff investigation in Section 301 of 1974 Trade Act. This will focus on sectors of China’s economy heavily subsidized and subsidized by Chinese Communist Party. This investigation will focus on high-tech industries like batteries and semiconductors, which have been unfairly subventioned by the Chinese government to the detriment of American companies.