Lobbyists pressure Trump to lift trade duties
As President Donald Trump struggles to find new ways to cushion the economic blow from the rapidly spreading coronavirus, industry groups, lawmakers and even some government officials are returning to the issue of lowering trade duties on Chinese and other imported goods..
Those who disagree with the imposed duties (both inside and outside the government) see the virus crisis as a great opportunity to abolish at least some import taxes, since the first phase of the trade deal between the United States and China was reached in December.
Lobbyists say lifting Trump’s protectionist policies could save American companies and consumers billions of dollars and send a positive signal to investors who plummeted 10% in US stocks on Thursday..
So far, trade duties of up to 25% on imports of Chinese goods worth about $ 370 billion remain in force. US importers have been charged $ 48.1 billion in duties on Chinese goods over the past 20 months, according to the US Customs and Border Protection..
«This is a tax that is entirely within the purview of the executive branch, so you can very quickly bring tax cuts to American businesses and American consumers by removing existing trade duties.», – Rep. Stephanie Murphy, US Congressman, told Reuters on Thursday.
On Wednesday, a Florida Democrat called on U.S. Trade Representative Robert Lighthizer to declare a trade «detente», removing tariffs on both Chinese and European goods to help small and medium-sized businesses.
According to Murphy, Lighthizer, who for three years spearheaded the Trump administration’s efforts to impose tariffs on Chinese goods, «did not accept this idea» during a closed-door meeting with members of the budget committee.
The U.S.-China Business Council is also pushing for tariff cuts by both China and the United States to help both countries weather the pressure of the coronavirus..
«Both economies suffer from a common problem, ”said USCBC President Craig Allen. – Both sides should use this as an opportunity to mitigate the self-inflicted damage from the imposition of trade duties».
But, according to Allen, there are different opinions about trade duties in the Trump administration, because «there is no clear consensus on further progress towards the reduction of duties, no matter how obvious that it is in the interests of both countries».
Trump touted his tough stance on trade with China as a key differentiator from the Democratic contenders in the November presidential election. Keeping tariffs on Chinese goods allows him to say that he retains leverage with China for the second phase of the trade deal.
But rapidly deteriorating financial markets and fears that COVID-19, the disease caused by the new coronavirus, will halt economic activity around the world, could lead to a shift in attitudes about trade within the administration, a source familiar with White House trade discussions said..
«This is unlikely to happen due to the election dispute, – said the source of Reuters. – But COVID has changed a lot, and the industry sees opportunities here».
Before the coronavirus significantly lowered global forecasts, the International Monetary Fund believed that post-Phase I trade tariffs in the US and China would cut the global economic impact by about 0.5% in 2020, or about $ 450 billion..
The National Association of Manufacturers on Monday released a coronavirus action plan that called on the administration «develop a targeted list of products for which trade duties can be suspended or canceled to stimulate economic growth and job creation».
US Treasury Secretary Steven Mnuchin continues to advocate tariff cuts as a path to further economic growth, said Derek Skissors, China policy expert at the American Enterprise Institute..
«Wall Street officials inside and outside the administration have consistently pushed for tariff cuts since the deal last week, Skissors said. – The risk of a leap in trade deficit at the end of the year, when China tried to turn the situation towards a V-shaped recovery, blocked it».
Mnuchin said last week that duty cuts were not considered at the time, but as the situation develops «we will consider all the options that we consider important», to help small firms and some sectors of the economy.
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White House trade advisor Peter Navarro, a consistently opposed presidential administration member of China’s concessions, dismissed any suggestion that tariffs could be lifted..
«There is no discussion in the White House about this. This is just fake news from the usual Wall Street suspects.», – he said.
Even economists who support tariff abolition say it may be ineffective as a short-term incentive.
«Continuously raising trade duties for China is a good idea, ”said Heritage Foundation economist Paul Winfrey. – Rapid changes in trade policy specifically related to the pandemic may not give them the boost they want because it will contribute to the long-term trade uncertainty that has stifled growth».