President Joe Biden’s attempts to reduce inflation are being hampered by tensions between the United States and China, according to economist Jeffrey Sachs on CNBC’s “Street Signs Asia.”
Professor Sachs of Columbia University and the head of the United Nations Sustainable Development Solutions Network argued that the Biden administration should not have kept the tariffs on China that existed under Trump.
“Biden’s pretty much following the same anti-China line, almost perhaps even intensifying it relative to Trump” he said. “I think that’s bad for the world for a lot of dangers. It doesn’t help the inflation side.”
Biden approved the Inflation Reduction Act earlier this week. Even though business lobby groups have voiced their strong disapproval, it includes a corporation tax increase that economists claim “won’t affect most U.S. companies.”
“We’re cutting deficit to fight inflation by having the wealthy and big corporations finally begin to pay part of their fair share,” before signing the law, Biden stated.
A typical term for a piece of legislation that has nothing to do with inflation for the foreseeable future, according to Sachs, is what the bill is called. The new law’s ability to contain inflation in the foreseeable future has also been questioned by other analysts.
According to the professor, inflation will likely continue to be high for some time. He claimed that the unjustified invasion of Ukraine by Russia and other ongoing political dangers add to the strain from inflation.
“We keep stoking the supply side shocks with war, with sanctions, with the geopolitical tensions,” said Sachs. He proposed using trade as a tool to strengthen the world economy “rather than using trade as a weapon.”
According to some economists and officials, lowering tariffs on China might eventually reduce inflation by 1%.
The visit of American politicians to Taiwan, which is self-governing, and Chinese military drills close to the island have contributed to simmering tensions between Washington and Beijing.
According to Sachs, a number of factors, including a decline in domestic demand and a downturn in the property market, have hurt China’s economy. Investment institutions have similar concerns about the Chinese economy. Recently, Goldman Sachs and Nomura reduced their predictions for the nation’s full-year growth.
“China’s contributing to the real slowdown of the world economy,” Sachs said. “We have a kind of a synchronized slowdown in North America, in Europe, in China and with tightening credit conditions worldwide. I think we’re in for a very difficult year in 2023.”