Lawmakers Call for Raising Tariffs and Severing Economic Ties With China
A bipartisan report recommended stripping China of the low tariffs the United States granted it two decades ago, among other actions.
Lawmakers Push for Economic Decoupling with China
Bipartisan lawmakers are calling for the severing of more economic and financial ties with China. The House Select Committee on the Chinese Communist Party released a report signed by both House Democrats and Republicans, outlining a range of recommendations to reset America's economic relationship with China.
The report argues that China has engaged in a long-term campaign of economic aggression, undermining American firms and dominating crucial global industries. It highlights the vulnerability of the United States in the event of a broader military conflict.
The recommendations include imposing new tariffs on certain Chinese goods, cutting off the flow of capital and technology between the two countries, and requiring publicly traded American companies to disclose ties with China. The report also suggests investing in U.S. research and manufacturing capacity to counter China's dominance in sectors like pharmaceuticals and critical minerals.
Calls for Bipartisan Legislation on China
While many of the report's recommendations may not be adopted, they could pave the way for bipartisan legislation on China in the coming months. Representative Mike Gallagher, the committee's chairman, emphasized the need for Congress to take action and create clear rules for doing business with China, rather than relying on executive orders that create uncertainty.
The report reflects a shift in the bipartisan consensus towards China. Previously, there was a belief that economic interdependence with China would lead to peace and stability. However, growing concerns about China's potential weaponization of economic ties have prompted a reevaluation of U.S. policy.
The report acknowledges that extricating the United States from its economic dependence on China will be challenging. It suggests developing alternative markets and preparing for potential retaliation from Beijing.
Tariffs and Economic Consequences
One of the report's key recommendations is phasing in a new set of tariffs for China over a short period of time. This proposal has been debated among lawmakers and has garnered support from former President Donald J. Trump and other Republicans. However, raising tariffs on Chinese products could face opposition from businesses and potentially slow economic growth.
The United States already has significant tariffs on many Chinese products due to the previous trade war initiated by the Trump administration. The suggested changes would increase levies on additional items like toys and smartphones. A study commissioned by the U.S. China Business Council estimates that such tariffs would lead to a $1.6 trillion loss for the U.S. economy over five years.
Critics argue that the report's recommendations undermine the principles of market economy and fair competition, and risk destabilizing global industrial and supply chains. However, lawmakers believe that reducing Beijing's leverage and ensuring U.S. economic independence are necessary steps.
