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Yellen Says Administration at Odds on China Tariffs

Treasury Secretary Janet Yellen said during a press conference in Brussels that there's a variety of opinions in the administration about what to do on tariffs, and officials haven't been able to agree on how to proceed. "I've said previously that I think that some of the tariffs that were imposed by President Trump in retaliation for China's unfair trade practices, some of them, to me, seem as though they impose more harm on consumers and businesses and aren't very strategic in the sense of addressing real issues we have with China, whether it concerns supply chain vulnerabilities, national security issues, or other unfair trade practices," she said.

"And so, I see a case not only because of inflation, but because there would be benefits to consumers and firms from some of the tariffs, that some relief could come from cutting some of them. But we're, we're having these discussions. There are a variety of impacts. There are a variety of opinions. And we really haven't sorted it out yet come to agreement on where to be on tariffs. And, you know, I respect the opinions I heard, I hear expressed around some policy tables, there are a variety of valid concerns."

Yellen is in Europe to meet with finance ministers from G-7 nations. She also said during the press conference that price caps and tariffs are possibilities to deal with Russian aggression. "You know, this is important for Europe to decide what they think is best," she said.

The day before, Yellen gave a speech to the Brussels Economic Forum, praising the unity that the European Union and U.S. have had in imposing sanctions on Russia, but suggested that the developed economies that have confronted Russia need to be similarly unified in addressing economic vulnerability due to China.

"We have become too vulnerable to countries using their market positions in raw materials, technologies, or products to exercise geopolitical leverage or disrupt markets for their own gain. For example, the development of dependence on Russian oil favored cost and convenience over concentration risk and considerations of security.

"And energy is not the only example of trading off cost against security. Russia is also a large supplier of key minerals. And we have long accepted a significant dependence on China for the supply of rare earths. These minerals and materials comprise vital inputs in aviation, vehicle production, battery manufacture, renewable energy systems, and technology manufacturing. China is responsible for 60 percent of rare earth mining and nearly 40 percent of reserves, giving the country geostrategic leverage. While many of these materials are abundant in the earth, they are costly and, in some instances, polluting to extract.

"In addition, China is building a consequential market share in certain technology products and seeks a dominant position in the manufacture and use of semiconductors. And China has employed a variety of unfair trade practices in its efforts to achieve this position.

"We have a set of common vulnerabilities that we should address," she said.

She also pointed to solar panels, which she said cause a conflict of priorities -- China's price advantage contrasted with the human rights abuses embedded in the products. She did not use the word Uyghur, but numerous shipments of solar panels produced in Asia have been subject to withhold release orders because CBP says they contain polysilicon made with forced Uyghur labor.

"My point is to suggest that we should consider ways to maintain free trade and at the same time lessen some of these risks," Yellen said. She said the previous administration's unilateralism to confront China was not fruitful.

"We have a common interest in incentivizing China to refrain from economic practices that have disadvantaged us all," she said. "China is more likely to respond favorably if it cannot play one of us off against another."