Brainard Highlights Necessity of Tariffs to Avoid China Shock 2.0
WASHINGTON — The Coalition for a Prosperous America (CPA) today welcomed comments by U.S. Treasury Secretary Janet Yellen that new Section 301 tariffs on Chinese goods would not raise consumer prices. Similarly, National Economic Council Director Lael Brainard reiterated the importance of the Section 301 China tariffs to avoid a China Shock 2.0, which CPA Economist Andrew Rechenberg wrote about recently. Yesterday, CPA applauded the Biden administration announcement that it would be increasing Section 301 tariffs on $18 billion worth of imports.
“I don’t believe that American consumers will see any meaningful increase in the prices that they face,” Secretary Yellen said Tuesday in an interview on the PBS NewsHour. Yellen also highlighted the importance of the Section 301 China tariffs to protect American manufacturers and workers. “It’s very important to protect our workers and our firms in these strategic sectors from the kind of dumping that results when China develops massive overcapacity in these areas,” Secretary Yellen said.
In remarks to the Center for American Progress, NEC Director Brainard will say that, “We have learned from the past. There can be no second China shock here in America. China is using the same playbook it has before to power its own growth by investing in significant industrial overcapacity and flooding global markets with artificially cheap exports.”
“Secretary Yellen and NEC Director Brainard are exactly right: tariffs will not raise consumer prices and they are a critical reshoring tool to stimulate domestic production, avoid future inflation, and to reduce dependence on foreign supply chains,” said Michael Stumo, CEO of CPA. “Free trade globalists that continue to oppose tariffs are living in a fantasy world that completely ignores the real world economy where China’s predatory and illegal trade activity continues to distort markets.”
A recent economic analysis by CPA Chief Economist Jeff Ferry documents that tariffs have strengthened the U.S. economy and “led to significant reshoring in certain industries.” Further economic analysis from CPA’s Economics Team shows that the Section 301 tariffs imposed in 2018 on Chinese imports reduced U.S. dependence on China. Additionally, a report by the U.S. International Trade Commission (USITC) analyzing the effects of Section 232 and Section 301 tariffs on more than $300 billion of U.S. imports found that the tariffs reduced imports from China and effectively stimulated more U.S. production of the tariffed goods, without impacting consumer prices.
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