America needs to be honest that tariffs aren't beneficial

On March 23, the United States announced that it would be reinstating "tariff exemptions" on 352 items imported from China, which had previously expired at the end of the Trump administration. Although less in number than before, the Wall Street Journal reported that the exemptions includes "certain kinds of bicycle parts, electric motors, machinery, chemicals, seafood and duffel bags."

It comes amidst a tense moment in China-US ties, but nonetheless adds to a growing body of evidence which demonstrates that America's tariffs on China, imposed during the Trump administration, are wholeheartedly self-defeating and impose more costs than gains upon the United States.

America's economy is not in a great position. Although politicians have sought to frame the country's recovery from the COVID-19 pandemic as yielding some of the greatest numbers in decades, an obvious consideration of the broader context demonstrates this is not the case.

On such a premise, 2022 has been a reality check on numerous fronts. First of all, America's annual inflation rate from February stands at an eyewatering 7.5 percent, a level which has been triggered by an overwhelming of the money supply through excessive stimulus, constraints on supply chains, rising commodity costs and of course that which no US politician wishes to publicly admit: the impact of Trump era tariffs on China.

Donald Trump's legacy has been to cement protectionism as a new political orthodoxy in the US, irrespective of economic realities. That is, to demand American jobs are put first, and to effectively scapegoat China as responsible for the depletion of US industries. On this backdrop, tariffs against China are seen in two dimensions: 1) that they will return jobs to the United States, or as the Trump administration once quoted to "third shore" them to other countries; and 2) that they will serve to contain China's economic rise by reducing its trade.

As a result, to unilaterally roll back these measures on a large scale has been rendered tantamount to political suicide in the US without first receiving enormous concessions from Beijing, who they continue to accuse of "unfair economic practices." Any US trade dialogue with China is pursued with a one-sided mantra of what China can give to the US, as opposed to the other way round.

However, the sudden announcement of new tariff exemptions shows that cracks are starting to appear in the unsustainability of this approach. If the tariffs were as above, aimed at reducing or diversifying American trade away from China, they have ultimately been ineffective.

In the year of 2021, bilateral trade between the US and China reached US$755.6 billion, an increase of 28.7 percent year on year. The increase in trade has been fortified by the reality that in terms of manufacturing capacity, logistics and logically lower prices through large scale supply and demand margins, China has remained the only country in the world capable of facilitating a supply chain large and effective enough for America's consumer needs, which were comparatively very large given the scale of the government's stimulus measures and the shift away from COVID-19 restrictions.

This means the tariffs, imposed all the way back in 2018-2019, were not in fact a game changer at all but as China-US trade has grown, instead contributed to the surge in inflation, passing down costs to US consumers and quickly pushing price rises into a vicious cycle. Companies were not able to find alternative supply chains, but instead raised their prices.

This has begun to put pressure on the US economy, with the Federal Reserve having misleadingly for a year tried to dismiss the inflation as "transitory" and has since been forced toward interest rate hikes, which further dampen the picture. New developments have also since added new uncertainties, including the crisis in Ukraine which has led to surging commodity and energy costs, further increasing prices across the board.

As a result, the Biden administration has decided to give a select number of products tariff reprieves. This will be good for both the US and China, yet it still refuses to confront the problem head-on that Trump's trade war tariffs against China as a whole are a self-defeating move which only exists to affirm negative and reactionary protectionist sentiment, than truly supporting the national interests of the United States.

The exemptions are perceived by businesses and some in congressional committees as being inefficient to reprieve the situation. They are designed to skirt round the problem of US-led inflation in the view of ultimately protecting the "sacred cow" of the tariffs, illustrating the continued unwillingness of the Biden administration to engage in real dialogue with China based on economic realities, as opposed to making one-sided fantasy demands on how they believe things should be, as opposed to how they actually are.

(The author is a South Korea-based English freelancer. The views are his own.)