OPINION:
A new National Taxpayers Union analysis of federal government trade statistics suggests that President Biden’s recent actions on tariffs will cost Americans a combined $387.8 billion over 10 years, the equivalent of $2,950 per U.S. household.
The taxpayers union analyzed the annual cost of these tariffs by reviewing data from archived U.S. Customs and Border Protection webpages. Then it added the cost of renewing them to the cost of further tariffs imposed by President Biden on May 14. Because this figure includes an estimate for the cost of maintaining tariffs that were previously set to expire, it is much higher than previous reports have indicated.
Mr. Biden has largely received a free pass for failing to roll back tariffs he inherited from former President Donald Trump. This is somewhat understandable since Mr. Biden did not impose them.
But tariffs imposed on imports from China under Section 301 of the Trade Act of 1974 were slated to expire after four years. Those tariffs would no longer be in place unless Mr. Biden had proactively taken action to extend them. They are now Mr. Biden’s tariffs.
His action to override their expiration date will cost U.S. taxpayers $372.8 billion over the next 10 years, based on $37.28 billion in Section 301 duty collections for the 12-month period ending this past April 17, projected forward for 10 years.
Mr. Biden also announced new taxes on $18 billion worth of imports from China. The Committee for a Responsible Federal Budget calculates that these new taxes will cost $15 billion over 10 years, which equates to $387.8 billion over the next decade.
The Trump administration initially imposed these tariffs to discourage unfair Chinese practices regarding intellectual property, innovation and technology.
According to U.S. law, the tariffs “shall terminate” after four years unless an interested party submits a request for continuation. In that case, the Office of the U.S. Trade Representative is required to conduct a review that considers the effectiveness of the tariffs in achieving their objectives, the effect of Section 301 tariffs on the U.S. economy, and possible alternative actions.
In 2022, the Biden administration announced that it had received such a request and temporarily postponed the scheduled expiration of Section 301 tariffs while it conducted the required “review of necessity.” Here is what the Biden administration’s review found regarding the effectiveness and cost of the measures, along with possible alternative actions.
Ineffectiveness of tariffs in achieving their objectives: “I conducted a statutory review of the PRC’s forced technology transfer and other intellectual-property-related practices, which were the subject of the 2018 Section 301 investigation. In that review, I found that the PRC continues to deploy these unfair trade practices,” U.S. Trade Representative Katherine Tai wrote, using the abbreviation for People’s Republic of China.
Net costs of tariff actions on the United States economy: The U.S. trade representative’s four-year review reported: “Studies estimate that the 2018-2019 U.S. tariff actions, in aggregate, have had small negative effects on U.S. aggregate economic welfare and real incomes in the short run, due largely to reduction in imports from and exports to China. In studies that estimate long-run impacts, those effects are estimated to continue in the long run.”
Other actions that could have been taken: The trade representative’s report failed to discuss alternative actions that would be more likely to accomplish U.S. goals without costing taxpayers hundreds of billions of dollars. One such option would be to initiate World Trade Organization challenges of China’s policies. While China failed to respond to unilateral U.S. tariffs, the country has a solid record of compliance with adverse WTO rulings.
Mr. Biden’s big tax increase comes just weeks after he promised not to raise taxes on anyone earning less than $400,000 a year. The tariffs will increase the cost of targeted goods at a time when inflation and the high cost of living top Americans’ concerns.
Democratic Colorado Gov. Jared Polis was one of the few elected officials to point out the problems with Mr. Biden’s tariffs: “This is horrible news for American consumers and a major setback for clean energy. Tariffs are a direct, regressive tax on Americans, and this tax increase will hit every family.”
More leaders should join Mr. Polis in seeking alternatives to President Biden’s failed and costly tariff policy.
• Bryan Riley is the director of the National Taxpayers Union’s Free Trade Initiative.
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