On The Money — Biden’s tough call on China tariffs

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President Biden is facing lots of pressure in all directions as he approaches his decision on repealing tariffs on Chinese goods. We’ll also look at the goal of Treasury Secretary Janet Yellen’s trip to Japan and why Twitter is suing Elon Musk.

But first, some new superbugs just dropped.

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.

Biden closes in on China tariffs decision

President Biden is contending with competing political and policy pressures as he closes in on a decision on whether to lift Trump-era tariffs on Chinese imports.

On one hand, it’s one of the only options at Biden’s disposal to try to lower the price of everyday goods that are subject to tariffs of up to 25 percent.

But axing tariffs would have a minimal impact on inflation, experts say, and doing so could alienate Biden’s labor union backers, some of his own Cabinet members and voters while causing him to look weak on China — all while heading into the midterm elections.

  • Experts predict that Biden will lift or reduce tariffs on as little as $10 billion worth of Chinese products, a tiny fraction of the $350 billion in goods slapped with tariffs by former President Trump.  

  • That move would likely appease White House advisers who see widespread tariff reductions as politically and strategically perilous ahead of November’s elections and Biden’s upcoming meeting with Chinese leader Xi Jinping. 

  • Polling shifts could factor into the decision: A recent Morning Consult poll found that 44 percent of Democrats preferred to keep China tariffs, a sharp reversal from February, when 47 percent of Democrats wanted Biden to reduce the import levies.

Karl lays it out here.

TOKYO DRIFT

Why ‘friend-shoring’ is at the top of Yellen’s agenda in Japan

Treasury Secretary Janet Yellen is in Tokyo meeting with Japanese officials about ways to restructure supply chains to bring down inflation.

Specifically, she’ll be talking about “friend-shoring,” a riff on the term “on-shoring” that refers to the process of re-jigging supply chains to favor U.S.-friendly countries that is gaining popularity in policymaking circles.

  • As the U.S. battles high inflation while keeping an eye on the geopolitical fallout from the war in Ukraine, alliances with key countries in East Asia are rising to the forefront of the U.S. economic agenda. 

  • Friend-shoring aims to increase economic cooperation with allies to avoid production and transportation snags made worse by geopolitical developments like the pandemic and the war in Ukraine.  

  • Yellen met Tuesday with Japanese business leaders to discuss how “friend-shoring with trusted economic partners can help ease inflationary pressures over time and address the bottlenecks that are raising prices for consumers,” the Treasury Department said in a statement.

The Hill’s Tobias Burns breaks it down here.

NOT SO FAST MY FRIEND

Twitter sues Elon Musk after attempt to terminate purchase

Twitter on Tuesday sued Elon Musk to force the Tesla CEO to complete his
$44 billion acquisition of the social media platform.

Musk on Friday said he was terminating the agreement because Twitter hadn’t given him enough information on bots on the platform.

  • A judge in the business-specialized Delaware Chancery Court will now determine whether his reasons for exiting the binding contract are legitimate. 

  • If not, Musk could be compelled to complete the purchase at the $54.20 price point he offered in April.

“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he— unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the lawsuit says.

The Hill’s Chris Mills Rodrigo walks us through the case here.

MILE BY MILE

Senate negotiators aim to unveil government funding bills by end of July

Senate negotiators are planning to unveil their annual government appropriations bills by the end of the month, as lawmakers struggle to hash out a larger bipartisan deal on how to fund the government amid disagreements over defense spending.

A spokesperson for the Senate Appropriations Committee confirmed in a statement on Tuesday that appropriators are working to draft funding legislation “to release to the public at the end of July,” with Congress slated to enter an almost month-long state work period beginning in early August.

  • The news comes as Sen. Patrick Leahy (D-Vt.), chair of the Appropriations panel, is still recovering following hip replacement surgery, after suffering a fall in his home during the July 4 recess. 

  • The House is already gearing up to begin voting on its first batch of fiscal 2023 funding bills in the days ahead, after appropriators in the lower chamber spent the past month marking up more than a trillion dollars in proposed spending legislation and passing it out of committee.

Aris has more here.

Good to Know

The National Association of Manufacturers (NAM) is pushing senators to reject a reconciliation package that would lower drug prices and raise taxes on high earners and renew their focus on the bipartisan bill to boost U.S. competitiveness with China.

“There is absolutely no reason to delay or derail legislation that has earned bipartisan support and would support American manufacturing workers for decades to come. The longer we wait, the further behind we fall,” NAM President and CEO Jay Timmons wrote in a letter to congressional leaders and President Biden on Monday.

Here’s what else we have our eye on:

  • Senate Democrats in a sprint to accomplish as much as they can before the August recess and the start of the fall midterm campaigns are already getting tripped up by a series of unexpected problems.

  • Amazon will collaborate with the Fred Hutchinson Cancer Center in Seattle on a Food and Drug Administration-approved clinical trial for a cancer vaccine.

  • The Department of Justice (DOJ) on Tuesday announced the creation of a new reproductive rights task force aimed at protecting abortion access and enforcing federal laws on reproduction rights in the wake of the U.S. Supreme Court overturning Roe v. Wade.

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.

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