This week, the White House blamed Russia for an inflation rate that hasn’t been so high since the 1970s. Earlier it was only petrol prices that were the fault of Russian President Vladimir Putin. Now, that’s all.
The “Putin price hike” has been a talking point for the White House since February, when Russia launched an all-out war with Ukraine.
There is at least some truth in the fact that the high gasoline prices are due to a US embargo on Russian oil, with Europe saying they will import less Russian crude immediately, and Russia is returning the favor by limiting the supply of natural gas to the euro All these actions were because of the war. Market speculators reacted and pushed up the oil prices. supply too lowMaking matters worse.
Then there’s food.
Sure, Ukraine is a significant wheat producer. It used to be the bread basket of the Soviet Union. But when has Ukraine’s poor wheat harvest crushed US commodity markets? (Hint: never.) No one in the US is importing Ukrainian, Russian or European chicken, beef, eggs and milk, and all of these prices are going up.
Inflation is bad for Democrats going into the midterm, even if the president, even if he’s in the White House, has only so much control over the economy.
Biden’s team is deflecting blame. For them, inflation is due to the Russo-Ukraine war.
Global corporations, smelling of blood in the water, are circling the White House and trying to remove China’s tariffs, known as the Section 301 tariffs, imposed by the Trump administration, arguing that such The move will reduce inflation. These charges are now being reviewed.
Free Traders at Peterson Institute for International Economics also making a caseHowever, they also acknowledge that the direct impact of the removal of duties on imports from China will reduce the Consumer Price Index (CPI). 0.26 percentage pointss.
Fed Chairman Jerome Powell said this week that inflation was rising, before a “Putin price hike”.
“Certainly inflation was rising even before the war in Ukraine started,” he said at a hearing this week.
“We need to keep an eye on the bigger picture,” Tai told the committee, which was often against China’s tariffs. This was especially true for senators from food-exporting states such as Alaska and Maine, where retaliatory tariffs had been in place. Because seafood exports to China have dropped from less than a third to half.
Tai disagreed that China’s tariffs would fix the inflation problem in any meaningful way. She also said several times that the current tariffs were needed to play part of a broader platform for defense and rebuilding US-China trade relations.
“With respect to all the economic crises that we are experiencing right now… it is our responsibility to do what we can to provide relief, but I am very clear that with regard to tariffs, we are trying to reduce the competitiveness of our economy. Can affect in the long term.
Senator Bill Haggerty (R-Tn), a member of the Appropriations Committee that heard from Ambassador Tai on Wednesday, asked whether removing tariffs under the guise of fighting inflation could encourage more bad behavior from China on trade.
“What kind of message will the removal of tariffs send to China?” Haggerty thought out loud.
Tai thinks the Biden administration is sticking with Section 301 tariffs, and will only give them some leeway, as it did earlier this spring.
“We are responsible for building US trade policy and guiding the US economy through today’s challenges, but we are also tasked with setting the US economy up for future success,” she said, referring to China’s tariffs. is called an important piece. Why leverage?
“A business negotiator never walks away with leverage,” Tai said. “The question for us … with respect to the many different Section 301 tariffs is how to convert this leverage into a program that strengthens the US economy. We need to use our tools more effectively. We need a completely new approach. And I think it should be done based on the tools that we are using now.”
Haggerty said the removal of tariffs would not affect inflation. “When the tariffs were originally imposed, inflation was 2% or less,” he said.
Tai can be thrown under the bus by the generally pro-big business Wall Street White House.
The White House has made some surprising business moves recently.
Biden issues executive order fee waiver On China’s solar panels made in Southeast Asia. the move essentially went up a commerce department investigation In dumping by Chinese multinationals in four Southeast Asian countries, led by Vietnam And ThailandWhich has become the major solar exporter to the US since anti-dumping and countervailing duties, as well as solar protection duties, were imposed on companies in mainland China as recently as 2018.
A survey by Morning Consult showed that registered voters are fine with keeping the Section 301 tariff and a separate note noted that democratic voter were increasingly supportive of maintaining the tariffs imposed by their arch-nemesis – Donald Trump. The poll was released in May.
What Republicans have accused since the 2020 presidential campaign could soften Biden’s terror tariffs on China.
Democrats will be forced to choose a side. According to two polls by Morning Consult, his voters have already chosen a side.
Some investors are skeptical that cheaper imports will cut inflation, even though it gives the market reason to rally for a while.
“The administration is desperate to see if they’re doing something on inflation, but unless they want to ask (Ukraine leader Volodymyr) Zelensky to call a truce, they can’t do anything about it.” And that includes cutting tariffs,” Brian McCarthy said. , founder of MacroLens, a global investment research firm based out of Stamford, Conn.
“I think there is another angle to the tariff situation. My feeling is that Biden intended to back him because some business lobby doesn’t like him. So he can say it as a response to inflation, but from day one it has been my view that he is looking for a reason to roll back those charges,” McCarthy said.
For now, Tai is the main voice in favor of keeping China’s tariffs within the executive branch.
“We will one day find ourselves on the other side of these challenges,” Tai told the Senate this week about supply chain issues, which have also affected prices. “It is very important that we do not belittle the need to protect our economic interests from a global system that has eroded our leadership in many different sectors of our economy.”
Credit: www.forbes.com /