Yellen Says China Tariffs Won’t Cause Meaningful US Price Hikes

(Bloomberg) -- US Treasury Secretary Janet Yellen said new tariffs on Chinese goods would protect US firms and workers without stinging the pocketbooks of American consumers.

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“I don’t believe that American consumers will see any meaningful increase in the prices that they face,” Yellen said Tuesday in an interview on the PBS NewsHour.

Earlier on Tuesday, the White House unveiled an array of tariff hikes on semiconductors, batteries, solar cells and critical minerals, in addition to previously reported increases on steel, aluminum and electric vehicles. The changes are projected to affect around $18 billion in current annual imports, the administration said.

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Tariffs are generally considered by economists to be a tax on consumers. Yellen has said that some of the tariffs imposed under former President Donald Trump caused more harm than good on US consumers and businesses. The White House didn’t reduce or eliminate any Trump-era tariffs in Tuesday’s announcement.

But in this case, she argued, the levies would protect the development of sectors critical to the US economy, make their supply chains more secure and, in the long term, lead to lower prices for the products they make.

“It’s very important to protect our workers and our firms in these strategic sectors from the kind of dumping that results when China develops massive overcapacity in these areas,” she said.

Regarding electric vehicles — which China produces much more cheaply than the US — she said, “over time, as our firms develop experience in producing these cars,” prices will come down.

Chinese authorities said they intend to respond to the US actions with “resolute measures” without providing any details on how they might retaliate.

Yellen said she hoped Beijing would respond “in a rational way” to what she called a very targeted set of actions.

“We have a deep trade and investment relationship with China,” she said. “We think most of it is beneficial both to America and also to China, and most of it is unproblematic and uncontroversial.”

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