Tariffs continue to capture the spotlight in Washington and across the U.S. campaign trail. In recent years, they have become a favored policy tool proposed to solve challenges in technology, , to name a few sectors. U.S. policymakers and candidates now routinely call for higher tariffs on a broad range of imports, claiming the action will boost U.S. competitiveness and address illegal and unfair trade practices abroad.
However, this reliance on tariffs is a risky approach. Imposing high, broad tariffs without a clear goal can unintentionally undercut domestic manufacturing and exports and raise costs for consumers and businesses. It can also spark retaliation from trading partners to block or disadvantage U.S. products, as the United States and many countries experienced directly during the Great Depression. It’s critical that policymakers recognize that the use of tariffs is just one of several tools the Office of the United States Trade Representative (USTR) has at its disposal – and it should not always be the default option.
The Section 301 tariffs on imports from China have demonstrated the trouble with tariffs from the start. First introduced by the Trump Administration in 2018 and left in place by the Biden Administration, the Section 301 tariffs place a disproportionate burden on U.S. businesses, workers, and consumers while failing to foster changes in China’s unfair trade practices.
To date, U.S. importers have paid in these tariffs while simultaneously facing substantial supply chain constraints and record high inflation. The average American household now pays nearly . of the tariffs found that they resulted in a nearly one-to-one increase in prices of U.S. imports. In other words, U.S. businesses and consumers are paying the full cost of these tariffs. Put simply, the Section 301 tariffs continue to hurt the very people they are intended to support without achieving meaningful changes in China’s policies.
Despite these concerns and the significant real-world data and stakeholder input readily available, USTR has slow-walked its statutorily required Four-Year Review of the Section 301 tariffs on Chinese products. USTR launched the review two years ago to assess the tariffs and consider continuation or changes to the policy. Stakeholders regrettably still do not know what USTR will do, when it will complete its work, or what USTR’s broader vision is for the U.S.-China trade relationship.
Rather than address industry-wide calls to reconsider these tariffs or to recognize the many harms this policy has inflicted on workers and businesses, USTR has repeatedly delayed sharing any results of the review. As stakeholders wait for USTR’s findings, the agency has added to the confusion by sticking with an opaque and disorderly exclusions process, which has effectively allowed USTR to choose winners and losers among importers of Chinese goods. USTR has routinely failed to provide adequate time to notify companies when product exclusions are extended, often waiting until just a few weeks before the exclusions are set to expire. They are following the same script this month, as the current exclusions will expire at the end of May 2024.
The Section 301 tariffs were a short-sighted policy solution when they were proposed, and the tariffs remain a harmful liability that is counter-productive to the Biden Administration’s focus on supply chain resiliency and securing American jobs. The tariffs have had a significantly negative impact on the ability of U.S. technology companies to create jobs in the U.S., open factories and maintain production in the U.S., and compete against foreign companies in global markets.
USTR has had years to study the overwhelming evidence of the negative economic consequences. We urge the Biden Administration to take action and provide relief to Americans affected by the cost of the tariffs and complete the Four-Year Review and release the findings in a public report. Each USTR public consultation on the Section 301 tariffs receives hundreds of submissions, many documenting the struggles U.S. companies of all sizes face from the additional costs of importing not only finished goods but also components or equipment to develop and manufacture their products. Allowing the data and analysis from USTR’s findings to become public would provide a holistic picture of the impact of the tariffs and could serve as a beneficial reference to guide future decision-making.
Further, policymakers and candidates for public office should take note of the difference between rhetoric and reality on these tariffs as a case study for future policy considerations. Ultimately, the trouble with broad tariff approaches is they are not effective.