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Tough Choices Ahead for the Biden Administration on China Tariffs

Tim Tarpley, SVP Government Affairs & Counsel

Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley

President Biden may find himself stuck between a rock and a hard place on the prospect of his Administration ending some (or all) of the China 301 tariffs this summer. Up until now, the President has stayed away from the issue, essentially extending the status quo base tariffs from the Trump Administration. But a legally mandated review, which must be completed this summer, is forcing his hand.

World events have dramatically shaken up the political calculations revolving around these tariffs. Six to nine months ago, it would have seemed a long shot that the President would even consider scaling back some of these tariffs. However, with inflation now one of the most significant domestic issues facing the White House, it appears likely the President’s hand will be forced and the Administration will at least consider some scaling back of the tariffs. 

Some of President Biden’s own economic officials have begun to call for some revisions of the 25% tariffs on more than $350 billion worth of Chinese imports, ranging from industrial machinery and parts to textiles to meat and other foods. Supporters of lowering the tariffs argue that the move could curb inflation and help with significant supply chain challenges facing the United States. On the other hand, labor unions — a strong Democratic constituency that are key for the President’s re-election — are urging him to retain the tariffs to protect American manufacturing.

Which way the President will go is hard to tell, especially with China’s continued saber rattling in the Taiwan Strait. Should China take any sort of aggressive posture against Taiwan, the likelihood of any recession would be dramatically decreased. The President may also be swayed by domestic events here in the United States. Should gas prices and inflation continue to rapidly increase this summer, the President’s hand may be forced. 

Bipartisan Energy Package Discussions Continue, However Prospects Still Murky

While talks on the bipartisan energy package continue, the prospects that consensus can be reached and a significant majority (over 60 votes) in the Senate can be achieved appears to be a long shot. Energy Workforce Members were in Washington, D.C. last week for the annual Fly-In and spoke with a senior Republican Senator on the prospects of the legislation moving forward. He said the prospect remains very unlikely in his opinion. 

At issue in the package is potential language that could expand the 45Q tax credit and increase the amount of funding available for the popular credit. In addition, Sen. Joe Manchin, who is leading the informal group, continues to make statements indicating his support for the inclusion of a methane fee. A leading democratic swing vote in the Senate also met with Council Members last week and felt that reaching the 60-vote margin would be difficult, and inclusion of significant permitting reform would be necessary to even approach such a margin. Energy Workforce will continue to follow developments with this package, however the number of legislative days before the election are dwindling as the summer campaign season kicks into high gear. 

If you would like to get involved with the Council’s advocacy efforts or the Government Affairs Committee, contact SVP Government Affairs Tim Tarpley.

Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.


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