Jacob Lew told CNBC on Tuesday that removing tariffs on goods during the worst of the trade war would help ease inflation.
He said on CNBC that there is no political space for it.
The United States and China have differences. I don't think it's appropriate to negotiate the exchange of one good or another on one side or the other. Lew said it should be about a level playing field. He was the treasury secretary during the Obama administration.
The tariffs were not an effective way to deal with the attacks on American consumers. Rolling back tariffs would reduce inflation in the United States.
The trade war between the US and China took a turn for the worse in 2018, when Beijing retaliated against the US with tariffs on billions of dollars worth of goods.
According to data compiled by the think tank, the U.S. tariffs on Chinese goods stood at an average of 19.3% on a trade-weighted basis in early 2021, while Chinese tariffs on American products were at about 20.7%.
The data showed that the U.S. had tariffs on Chinese goods at an average of 3.1% in the early part of last year.
Lew said that both the leaders have to create political space in our two countries for these issues to be issues where you can move and make progress, otherwise we either stay where we are. It gets worse. I think we can do better.
American businesses are bearing most of the cost burden from the elevated tariffs imposed at the height of the U.S.-China trade war, according to a report from Moody's.
The ratings agency said that the 20% U.S. tariffs on Chinese goods cost the U.S. importers more than 90 percent of their costs. The report states that the U.S. pays more for a Chinese product subject to the 20% tariffs than Chinese exporters do.
Lew told CNBC that the inflation will work its way through.
He doesn't think anyone is predicting hyperinflation. I think there is a bit of overconfidence about inflation. The public reaction to inflation is very strong.
Lew warned that policymakers have to walk a fine line and make sure that inflation doesn't slow the economy down so much that it hurts growth.
CNBC's Jeff Cox contributed to the report.
