China Business Council Advises Treasury, USTR Against Section 301 Tariffs

Congressman Brad Sherman (D-CA-30) was right when he said during a House Financial Services hearing last month that “China doesn’t need to hire a lobbying firm. They have all of them.”

The U.S China Business Council, which represents large American companies doing business in China, sent a letter to both Janet Yellen and Katherine Tai on November 12 in advance of  President Biden’s meeting with Xi Jinping.

In it, the Council listed a few bullet points they wanted to message to the Biden Administration: dial back the Trump era tariffs, especially the Section 301 tariffs on China.

The Council highlights Janet Yellen’s concern with inflation and said that now was the time to reduce many items subject to Section 301 tariffs.

From the letter:

“The Section 301 and retaliatory tariffs put in place over the last several years continue to disproportionately cause economic harm to U.S. businesses, farmers, workers, and families. For example, the Congressional Budget Office estimated that tariffs would cost the average American household nearly $1,300 in 2020 alone. American importers have paid over $110 billion in Section 301 China tariffs since their inception, about $40 billion of which has been assessed during the Biden Administration. These costs, compounded by other inflationary pressures, impose a significant burden on American businesses. We agree with Secretary Yellen’s recent comments that tariffs tend to increase domestic prices and raise costs to consumers and businesses due to higher cost inputs and that lowering U.S. and Chinese tariffs could help ease inflation.”

See CPA’s letter to Katherine Tai about Section 301 tariffs sent on October 20.

There is no chance that trade war tariffs are the cause of our current rise in the consumer price index.

China imports are about 3% of the economy. Less than half of those have tariffs. And those tariffs range from 7%-25%.

Current inflation is a function of a combination of easy monetary policy and fiscal spending – the first-ever Main Street bailout – that gave consumers stimulus checks, record unemployment benefits, and loans to sole proprietor businesses that never had to be repaid in the form of the Payroll Protection Plan. Inflation has nothing to do with tariffs against Chinese imported goods.

Moreover, the China 301 tariffs are a response to Beijing’s IP theft, which undoubtedly continues.

“Reducing China 301 tariffs would have no impact on inflation. Just as they had no impact before. There is no contrary data. And it would reward China for IP theft, causing even more violations of trade rules,” says Michael Stumo, CEO of CPA.

CPA has been warning Capitol Hill for months that K Street (and China) would use inflation and recent supply chain bottlenecks as a means to put the breaks on any new sanctions and tariffs. That all of this ends up being beneficial to those who wish a return to the status quo should not be lost upon any watchful eyes in Washington. President Biden and Xi Jinping will likely have a cordial meeting, with no real changes expected on the China side, and the potential for capitulation on the U.S. side becoming more real following the November 11 decision by Commerce not to pursue anti-dumping charges against Chinese solar companies in southeast Asia.

China has been pushing U.S. executives, companies, and business groups in recent weeks to fight against numerous bills in Congress that are counter to Beijing’s interests, Reuters reported last week. They have been busy sending letters and arranging meetings with a wide range of people in the business community as a loosely veiled threat against their business in China, no doubt.

According to Reuters, China’s embassy in Washington sent letters pressing executives to urge members of Congress to alter or drop specific bills that seek to enhance U.S. competitiveness.

One is U.S. Innovation and Competition Act, which was supposed to be taken up by the House but instead is likely to merge instead with the National Defense Authorization Act before year’s end. USICA has at least one provision in there that calls for rolling back Section 301 tariffs and making exclusions easier.

In 2018, CPA looked at Section 301 tariffs and pricing impacts. You can view that report here.


CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.

The latest CPA news and updates, delivered every Friday.


Get the latest in CPA news, industry analysis, opinion, and updates from Team CPA.