As Biden weighs China tariff options, any move unlikely to ease inflation in a big way

The Biden administration’s planned rollback of tariffs on Chinese goods initially spurred excitement in the stock market, but there are signs that it is more of a tactical shift by the US rather than a move towards a ceasefire in the ongoing trade war between the world’s two largest economies.

During a virtual tete-a-tete on Tuesday (Jul 5), US Treasury Secretary Janet Yellen and China’s top trade negotiator, Vice Premier Liu He, discussed the tariff issue again. A subsequent statement by the Treasury, however, did not mention the specific types of duties and instead focused on the broader economic challenges and Russian sanctions.

“We see this as a one-off event with bilateral relations continuing to be very challenging,” said strategists at brokerage Bank of America Global Research, in a note to clients. “With the midterm elections approaching in the US, anti-China rhetoric could escalate along with non-tariff trade actions.”