Murphy Introduces Bill to Require Study on Tariffs' Inflationary Effects
Rep. Stephanie Murphy, D-Fla., who's been a defender of trade liberalization, introduced a bill that requires the Treasury Department, the Office of the U.S. Trade Representative and the International Trade Commission to assess whether the Section 301 tariffs, Section 232 tariffs, safeguard tariffs and the expiration of the Generalized System of Preferences benefits program have contributed to inflation.
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The expiration of GSP is the only recent development in that string of trade actions, and inflation was quite low in January 2021, immediately after the program expired. Inflation started climbing in April 2021, crossed 5% in June 2021, and is over 8% now.
Murphy said in a June 8 press release: "American families and businesses are struggling with sky-high inflation. The President and Congress have a responsibility to take all reasonable steps to alleviate the economic pain people are feeling," While her bill does not force the administration to roll back any of the tariffs, she said that if there is evidence the tariffs are inflationary, "as both common sense and basic economics strongly suggest, the federal government should act to repeal or reduce those tariffs in order to provide price relief to the American public.”
Murphy asked Treasury Secretary Janet Yellen, during her appearance in front of the House Ways and Means Committee June 8, about her proposal, and said when she hears government officials say that the Section 301 tariffs give U.S. negotiators leverage with China, "that to me feels like a stale talking point and not really rooted in reality."
Yellen responded that lowering tariffs on imports would not be a panacea for inflation -- after all, only a third of spending is on physical goods, and we can't be sure how much of the savings businesses would pass through to consumers. But, she said, "I think some reductions may be warranted, [and] could help to bring down prices of things ... ."