On the morning of July 5th, Beijing time, China Liu He, Vice Premier of the People's Republic of China held a video call with US Treasury Secretary Yellen at the request. During the call, China expressed its concern about the cancellation of tariffs on China by the United States. However, the abolition of tariffs on China is not just China's demand. Doesn't the United States feel the urgency of solving this problem? As the spokesmen of the Ministry of Foreign Affairs and the Ministry of Commerce have repeatedly stressed, the removal of tariffs imposed by the United States on China will benefit not only China, but also the United States and the world. Of course, the United States is well aware of this. Otherwise, why did Yellen take the initiative to "meet" with Vice Premier Liu He on July 6, the day before the US tariff on 34 billion US dollars of goods to China expired?

Imposing tariffs on China is a "weapon" for former US President Trump to launch a Sino-US trade war. Under the guidance of the concept of "American priority", this unilateralism that ignores WTO rules is not only a trampling on the concept of free trade, but also a huge obstacle to the development of Sino-US economic and trade relations. There is no doubt that the practice of increasing tariffs by the United States and China has brought harm to many Canadian enterprises. But for the trade war, we are not willing to fight, and we are not afraid to fight. We have to fight if necessary. As the saying goes, "If you kill the enemy, you will lose 800", and the increase in tariffs will also harm the interests of the United States. Not to mention that China's countermeasures will make it difficult for some American enterprises to enter the China market. Even from the effect of tariff increase, it will show the United States what it means to "lift a rock and drop it on your own feet".

Strictly speaking, the abolition of tariffs on China is no longer a question of how many new benefits can be added to the United States, but a question of whether the American economy can be freed from the unfavorable situation. In the case of high inflation in the United States, isn't it difficult for us to continue to impose tariffs on goods imported from China? In fact, the current rate hike in the United States has reached 2 percentage points, and inflation has not eased. In May, the consumer price index rose by 8.6% year-on-year, the biggest increase in 40 years. Some time ago, the excessively loose monetary policy in the United States has laid the groundwork for inflation, but the Federal Reserve believes that this is a "temporary" phenomenon and has lost the best opportunity to prevent inflation. The longer the high inflation in the United States lasts, the more difficult it will be to curb, and the more unfavorable it will be for Biden to improve his support rate. However, at present, it is too late for the Fed to raise interest rates, so it can only be done. If we want to control inflation from the root, we should not only tighten monetary policy, but also start from three aspects: canceling tariffs on China, cooling down the conflict between Russia and Ukraine, and actively controlling the spread of the epidemic, so as to reduce the constraints of external factors on curbing inflation in the United States and let American monetary policy play its role again.

The cancellation of tariffs on China was originally a good thing to help the United States curb inflation, but the United States seems to be somewhat absent-minded In addition to Biden's own hesitation, Biden's ruling team also holds different views on this. On the one hand, Finance Minister Yellen and Commerce Minister Raymond tend to cancel the tariff increase, because the tariff increase will not only fail to sanction China, but also "artificially" create an imported inflation. In addition, some American enterprises, including those that have a lot of transactions with China, have repeatedly called for the abolition of tariffs imposed on China. On the other hand, U.S. Trade Representative Qi Dai and National Security Adviser Sullivan disapprove of lifting tariffs on China. They believe that it is impossible for the United States to throw away its chips and put pressure on China easily. In fact, it is not difficult to understand that Yellen served as the chairman of the Federal Reserve and now serves as the US Treasury Secretary, so she should consider the issue from a macro perspective. As an American trade representative, although there are different opinions within Biden's team on whether to cancel tariffs on China, Time supports the position of canceling tariffs on China. At present, the inflation in the United States is far from the inflection point, and the US economy fell by 1.6% in the first quarter. With the mid-term elections approaching, the US economy with both "stagnation" and "growth" will certainly not give Biden's Democratic Party extra points.

Although the United States is well aware of the above situation, its actions do not conform to this situation. On the one hand, there are different views on the abolition of tariffs on China in the United States. Qi Dai's post made him hear more complaints from American domestic enterprises, and less or unwilling to hear the contribution made by "Made in China" to the American economy. By July 5th, Qi Dai had received about 400 letters opposing the lifting of tariffs on China. On the other hand, Biden's administration overestimated the weight of tariffs on China and hoped that China would withdraw its industrial support policies in high-tech fields such as chips and batteries. To this end, the United States is also planning a new round of 30 1 survey. With such a guiding ideology, although it is obvious that canceling tariffs on China will be more beneficial to the US economy, its implementation is as bad as "squeezing toothpaste". It is reported that among the goods worth about $370 billion imported from China that the United States imposed tariffs on China, the tariffs imposed in the Trump era were only lifted for goods worth about $654.38+000 billion. As far as the types of goods involved are concerned, they are basically used first. As for what is urgently needed, it must be those kinds of goods that can affect CPI, such as clothing, school supplies and other just-needed goods. This is not to say how much Biden cares about the American people, but to fear that voters will say "no" to the Democratic Party and Biden with their hands in the mid-term elections and subsequent presidential elections.

It should be noted that this call between Liu He and Yellen will inevitably involve the issue of the United States canceling tariffs on China, but this issue is obviously only one of many issues discussed by the two sides. The economic situation in the United States is quite embarrassing now. Not long after the interest rate hike began, the American economy experienced negative growth, and the current price increase momentum has not yet reached an inflection point. Imposing tariffs on China is not the main reason for this round of inflation in the United States, but it is mixed with the conflict between Russia and Ukraine and the epidemic, forming three major obstacles that restrict the American economy. Only by removing the above obstacles can the Fed's monetary policy be useful. These overall situations are naturally visible to former Federal Reserve Chairman Yellen, but may not be visible to US trade Qi Dai. Or Qi Dai can see, deliberately "ignore".

Yellen called Vice Premier Liu He, and China was very rational and calm. We expect that the United States will do the opposite in canceling tariffs on China, but it has not shown great "catch-up". China's exports to the United States increased from US$ 429.75 billion in 20 17 to US$ 57,665,438+10 billion in 200210, an increase of 34. 1%. The reason is not difficult to understand. On the one hand, American consumers can't live without "Made in China", on the other hand, products from Southeast Asia can't completely replace "Made in China". A research report released by Moody's Investors Service last year showed that only 7.6% of the increased costs due to tariff increase were absorbed by China, and more than 90% of the increased costs were borne by American enterprises and consumers. From this point of view, Biden's team need not be so stingy, expecting to get anything in return from China on the issue of canceling tariffs on imported goods to China. If we persist in getting back some benefits for the United States, then the biggest benefit we can get back is to reduce the inflationary pressure in the United States and reduce the resistance to economic recovery in the United States. Therefore, the more thorough and early the Biden team cancels the tariff increase, the more favorable and proactive it will be for the United States. Why not?

Planning: Jiang Xinyu

Editor: Zhi Li