INFLATION AND IDEOLOGICAL WAR, THE DILEMMA OF JOE BIDEN
On January 21st, 2021, Joe Biden succeeded Donald Trump as President of the United States. Since then, and despite relative self-effacement, he has tried to counteract the erratic international policy of his predecessor, while fighting against rising inflation.
Among other initiatives, he has put an end to taxes on aluminium, which mainly affected his Canadian neighbour, reduced the sanctions imposed on Cuba and reintegrated the Paris climate agreements. But torn between inflation and ideological conflict with Beijing, should the US put an end to the commercial war started by D. Trump and led against China?This reflection comes in a complex context of worrying inflation – 8.3% in one year, a first since 1981 – in the run-up to the mid-term elections. Despite the relative good health of the economy and the generous aid granted to Ukraine, a decision welcomed by the Americans, Joe Biden is now suffering from a low approval rating and could well lose Congress for good next autumn.
This raises the question of customs duties that mechanically increase the price of goods. As with aluminium or French wine, Washington could abolish the customs duties that currently affect two-thirds of Chinese imports, with the aim of reducing this inflation and gaining popularity.
But as the poorest households are suffocating, why is this suspension still being debated?
First, the suspension of tariffs would probably be gradual and partial, greatly limiting the impact of such a measure. Moreover, this inflation is global and mainly due to the explosion in raw material prices. The reduction of customs duties would therefore not in absolute terms hinder the rise in price.
However, the main reason for this hesitation is the conflict with China. With China making no secret of its ambitions to overtake the United States by 2050, repealing these tariffs would be seen as an admission of weakness. Of course, the trade war led by Donald Trump has not achieved its goal of changing the relationship between Beijing and Washington, but a war, even an unnecessary one, must be won. The challenge for Joe Biden is therefore to prioritize either his domestic market or his international leadership, to improve his image ahead of the elections, or to confront China.
Customs tariffs and policies are once again at the center of a political-economic dilemma.
