The United States will keep tariffs imposed on Chinese goods by the former Trump administration in place for now, but will evaluate how to proceed after a thorough review, Treasury Secretary Janet Yellen told US TV network CNBC.
“For the moment, we have kept the tariffs in place that were put in by the Trump administration … and we’ll evaluate going forward what we think is appropriate,” Yellen said, adding that Washington expected Beijing to adhere to its commitments on trade.
Asked if tariffs worked, Yellen hesitated, then said: “We’ll look at that.”
The White House last month said it would review all national security measures put in place by former President Donald Trump, including an interim trade deal with Beijing.
The deal eased tensions between the world’s two largest economies after a damaging trade war that US experts estimate led to a peak loss of 245,000 US jobs, but most of the tariffs remain in place on both sides.
China pledged to buy $200bn in additional US goods and services over two years under the interim deal signed by Trump in January 2020, but Beijing fell 42 percent short of its target for last year, a recent study showed.
US President Joe Biden has promised to mend fences with US allies but has taken a hard line against China, warning this week that Beijing would pay a price for its human rights abuses.
“We’re in the process of evaluating what our approach should be toward China, but there are a range of issues where we see unfair practices,” Yellen told CNBC, citing concerns about China’s behaviour on trade, forced technology transfers and subsidies to high-technology industries.
“We want to make sure that we do address and hold China to its international obligations in these areas,” she said.
There were also areas where the two countries needed to cooperate, she said, such as working to end the pandemic and combatting climate change.
Meanwhile, on Biden’s proposal to spend heavily on infrastructure, education and fighting climate change, Yellen said that tax hikes would be needed to pay for the investments.
The Treasury secretary said details were still being worked out on the infrastructure and clean energy package, which would come on top of a $1.9 trillion coronavirus relief plan that is now working its way through Congress.
She said it would include clean energy investments to fight climate change and funding education and training to build the skill levels of American workers and boost US competitiveness.
“Certainly part of the package, the parts that are permanent, will be paid for in order to not raise long-term deficits, but we’re still working on the details of the package.”
The infrastructure, climate and education plan will probably be proposed later this year and would involve spending over a number of years, “and probably tax increases to pay for at least part of it would probably phase in slowly over time.”
Biden’s $1.9 trillion COVID-19 stimulus package aims to ensure that growth is strong enough to get back to full employment faster than recent baseline estimates from the Congressional Budget Office, which projected earlier this month that based on current laws, it would take until 2024 to reach pre-pandemic employment levels.
With the Biden stimulus plan and good progress on vaccines to defeat the pandemic, she said: “I think we could be back to full employment next year.”
Yellen downplayed the potential risk of inflation from trillions of dollars in new stimulus packages and infrastructure spending, saying that inflation has been low for 10 years and the Federal Reserve has tools to deal with it.
“The greater risk is of scarring and people having this pandemic take a permanent lifelong toll on their lives and livelihoods,” if no further aid is provided, she said.