Yellen Says Premature to Remove Section 301 Tariffs on Chinese Goods

Treasury Secretary Janet Yellen, who has in the past been a skeptic of the utility of the broad scope of Section 301 tariffs on Chinese imports (see 2205180036), rejected the premise of a reporter's question that the U.S. could remove tariffs to "extend an olive branch" to China.

Yellen, who was speaking at a press conference in Gandhinagar, India, July 16, ahead of a G-20 summit for finance ministers, told the questioner that while de-escalating is good, "the tariffs were put in place because we had concern with unfair trade practices on China’s side -- and our concerns with those practices remain. They really have not been addressed," she said, adding that China imposed retaliatory tariffs in response to the U.S. Section 301 tariffs. “So perhaps over time this is an area where we could make progress, but I would say it’s premature to use this as an area for de-escalation, at least at this time.”

She added that the tariffs were imposed because of U.S. "concerns about unfair trade practices, particularly those affecting intellectual property and technology transfer, and those concerns have not really been addressed."

She said the administration is completing the review that began four years after the tariffs were imposed -- the review is required by statute -- but she gave little hope to those who wish that the number of products targeted will be reduced.

"We have to see what comes out of the four-year review, but I would emphasize that really the underlying concerns we have have not been addressed and we need to work on that going forward."

Yellen was asked whether a decline in foreign direct investment in China and a sharp decline in Chinese exports are fruits of the American emphasis on de-risking and friendshoring. Yellen said she thinks those effects will be more gradual, and she thinks the weakness in the Chinese economy has more to do with soft domestic demand.

"De-risking and friendshoring is an important priority for the United States, and it is something we are promoting here in India and will be discussing in Vietnam in the next leg of our trip. But I expect that will be something that will take place gradually over time," she said.

In response to a later question from an Indian reporter, Yellen said India is "an indispensible partner" in increasing the resilience of U.S. supply chains through friendshoring, and that there continue to be announcements of U.S. firms using India as an export platform.

"I hope to use this trip to deepen what is already a very significant relationship with concern to friendshoring," she said, noting that bilateral trade hit an all-time high in 2022, and she said the administration is "looking to see it grow even more."

She said she saw in China that leadership is anxious "to communicate that the business environment in China is open and friendly. There is a desire to see foreign investment in China." She added that she met with American businesses that also are eager to invest in China and see an environment where they can grow and prosper.

"I made clear in my discussions, that while we have concerns around national security and human rights, which we certainly will prioritize and not compromise on, there are many areas in which we have trade and investment that are completely uncontroversial and beneficial to both sides," she said.

The Chinese Foreign Ministry did not directly address Yellen's remarks in its regular press conference on July 17, but said, "On China-US relations, we view and develop our relations with the US by following the principle of mutual respect, peaceful coexistence and win-win cooperation. We also hope the US will work with China and bring bilateral relations back to the track of healthy and stable growth," according to a transcript provided in English.