- Congress and the Administration Should Advance Free Trade to Aid in COVID-19 Economic Recovery
Relations between the U.S. and China are increasingly icy, and justifiably so given China’s mishandling of COVID-19 and its undermining of Hong Kong’s autonomy. However, even as overall tensions rise, it is important to remember that the trade dispute between the U.S. and China continues to take a toll on the U.S. economy and the pocketbooks of Americans. As Americans fight to get back to work after the coronavirus-related shutdowns, the government should unleash the power of the free market by removing barriers to trade. Despite the signing of the Phase One deal between the U.S. and China―which reduced tariffs on $300 billion worth of imports from China to 7.5% and included agreements on several other issues―Americans still pay tariffs of up to 25% to purchase $250 billion worth of goods from China. Since 2018, the tariffs on imports from China have cost Americans more than $49 billion, a cost which grows each day. Similarly, a new report from the National Bureau of Economic Research found that tariff actions against imports have a cooling effect on the investment growth rate of publicly traded companies. As the U.S. looks to make an economic recovery after COVID-19, it is crucial that policymakers remember the important role that trade, including trade with China, will play. After all, China is one of America’s top trading partners. China was ranked number one until 2019, when it dropped down to number three due to the effects of the trade war and tariffs. China is still the leading source for imports, but total imports fell by more than 10% between 2017 and 2019. Americans also exported 18% less to China over the same period.