Yellen asserts new China tariffs won't spike US prices: Report

US Treasury Secretary Janet Yellen reassured American consumers that the latest round of tariffs on Chinese goods will not lead to price hikes domestically.

Speaking on the PBS NewsHour, Yellen noted that the new tariffs aim to shield US firms and workers without burdening consumers.

"I don’t believe that American consumers will see any meaningful increase in the prices that they face," Yellen stated on Tuesday.

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Earlier in the day, the White House announced a series of tariff increases targeting semiconductors, batteries, solar cells, and critical minerals, adding to previously reported hikes on steel, aluminium, and electric vehicles.

These measures are expected to impact approximately $18 billion in current annual imports.

Economists often view tariffs as a tax on consumers.

Yellen acknowledged that some tariffs imposed during former President Donald Trump's administration had adverse effects on US consumers and businesses.

However, she argued that the new tariffs are different as they aim to protect key sectors of the US economy and secure supply chains, ultimately leading to lower product prices in the long run.

Yellen highlighted the importance of safeguarding American workers and companies from the consequences of China's overcapacity in strategic industries.

"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 explained.

Regarding the electric vehicle (EV) market, where Chinese production is significantly cheaper, Yellen expressed confidence that US firms would eventually reduce costs through increased production experience.

"Over time, as our firms develop experience in producing these cars, prices will come down," she added.

In response to the US tariff hikes, Chinese authorities announced plans to implement "resolute measures" but did not provide specific details on their retaliatory actions.

Yellen expressed hope that Beijing would react rationally to the targeted tariffs. "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."

Yellen's remarks come amid ongoing US-China trade tensions, with both countries seeking to balance protective measures and economic collaboration.

(With inputs from Bloomberg)