Secretary Janet Yellen said Wednesday that tariff reductions on Chinese goods may be warranted as the White House tries to cool the hottest inflation in four decades, but said that such cuts are not a “panacea” to runaway consumer prices.
While testingifying before the House Ways and Means Committee, Yellen said the Biden administration is looking to reconfigure some of the Section 301 tariffs on Chinese goods imposed by former President Donald Trump in order to be “more strategic” to trade abuses by Beijing.
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“I think some reductions may be warranted and could help to bring down the prices of things that people buy that are burdensome,” Yellen said. “I want to make clear, I honestly don’t think tariff policy is a panacea with respect to inflation.”
She noted that goods account for just one-third of consumption in the country and said there is little evidence that tariff reductions could directly benefit consumers. Still, she said that some of the existing tariffs have hurt American consumers and businesses.
Commerce Secretary Gina Raimondo confirmed on Sunday that President Biden is considering lifting some tariffs on Chinese goods as he seeks to contain voter outrage over the hottest inflation in four decades and convince Americans that his administration is maximizing efforts to tame prices.
“We are looking at it. In fact, the president has asked us on his team to analyze that. And so we are in the process of doing that for him and he will have to make that decision,” Raimondo said Sunday during an interview on CNN.
Yellen was grilled over inflation during her two-day appearance on Capitol Hill, in which she said the US faces “unacceptable” levels of inflation as a result of the COVID-19 pandemic and the Russian war in Ukraine.
“We currently face macroeconomic challenges, including unacceptable levels of inflation as well as the headwinds associated with the disruptions caused by the pandemic’s effect on supply chains, and the effects of supply side disturbances to oil and food markets resulting from Russia’s war in Ukraine,” Yellen said in prepared remarks.
Yellen said that elements of Biden’s proposed spending legislation – including reform to the prescription drug market and clean energy initiatives – could help reduce costs for many American families.
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But she offered a few solutions to cool the hottest inflation in nearly four taken decades beyond that, and noted any actions from the White House or Congress would merely act as an accompaniment to steps by the Federal Reserve.
“To dampen inflationary pressures without undermining the strength of the labor market an appropriate budgetary stance is needed to complement monetary policy actions by the Federal Reserve,” she said. “Moving forward, elements of the president’s proposed legislation – including the clean energy initiatives and plans to reform the prescription drug market – can help lower the costs paid by American consumers.”