Democratic presidential candidate Joe Biden said he would remove Donald Trump’s tariffs on imports from China, which are taxes on U.S. consumers and companies. The former vice president’s statement defies what had been conventional wisdom about protectionism being a winning political stand. A Gallup poll in February 2020 detected the more positive views of Americans toward international trade, with 79% viewing trade as “an opportunity for economic growth,” while only 18% considered trade a “threat.”
Biden’s comments on tariffs came during an exchange with Lulu Garcia-Navarro, who hosts Weekend Edition Sunday and is a host of National Public Radio’s (NPR) morning news podcast Up First.
“Some have said Trump’s stance is a good one to counter China’s influence,” said Garcia-Navarro. “Would you keep the tariffs?”
“No. Hey, look, who said Trump’s idea’s a good one?” said Biden. “Manufacturing has gone into a recession. Agriculture lost billions of dollars that taxpayers had to pay.”
Biden laid out a multilateral approach to dealing with China’s trade practices and criticized the Trump administration’s unilateral approach.
“We’re going after China in the wrong way,” he said. “China is stealing intellectual property. China is conditioning being able to do business in China based on whether or not you have 51% Chinese ownership. That’s got to end. I spent a fair amount of time when I was vice president with President Xi because the president wanted me to get to know him. He’s no democrat with a small ‘d’ at all.”
Garcia-Navarro asked, “If you scrap those tariffs, what do you want in return, or are you just going to scrap them without any concessions?”
“No, no, here’s the deal,” said Biden, who questioned the premise. “The question is what is the appropriate behavior that they have to engage in international relations, in international trade with us, and they have to play by the international rules. And what we have done is we have disarmed ourselves.”
“We make up 25% of the world’s economy, but we poked our finger in the eyes of all of our allies out there,” said Biden, referring to the tariffs the Trump administration has imposed on allies in Canada, Europe and Asia. “The way China will respond is when we gather the rest of the world . . . That’s when things begin to change. That’s when China’s behavior is going to change.”
Manufacturing has not fared well under Trump trade policies. Research shows the Trump administration’s tariffs on steel and aluminum, which were not directed at China, raised prices and reduced employment in industries that use steel and aluminum.
“Estimates from a study released in December by Aaron Flaaen and Justin Pierce at the Federal Reserve Board of Governors show that by mid-2019, increased input costs due to the steel and aluminum tariffs are associated with 0.6 percent fewer jobs in the manufacturing sector than would have been the case without the tariffs,” according to economists Lydia Cox of Harvard and Kadee Russ of the University of California, Davis. “We compute that this amounts to about 75,000 fewer jobs in manufacturing attributable to the March 2018 tariffs on steel and aluminum, not counting additional losses among U.S. exporters facing tariffs other countries levied in retaliation.” (Emphasis added.) David J. Lynch of the Washington Post reported, “Biden has said he will ‘review’ those levies on industrial metals.”
Farmers also have lost under Trump’s trade policies. After the Trump administration imposed tariffs on Chinese goods, China retaliated against U.S. agricultural products, resulting in a 74% decline in U.S. soybean exports to China in 2018. The hardship to farmers across the Midwest, in Trump’s view, hurt him politically. He used the Commodity Credit Corporation to dole out $28 billion to farmers as of January 2020. “The Trump administration provided more taxpayer dollars to farmers financially damaged by the administration’s trade policies than the federal government spends each year building ships for the Navy or maintaining America’s nuclear arsenal,” according to a National Foundation for American Policy analysis.
Biden makes a valid point that the Trump administration’s unilateral approach to China has been ineffective. During an interview with Bob Davis and Lingling Wei of the Wall Street Journal, authors of the book Superpower Showdown: How the Battle Between Trump and Xi Threatens a New Cold War, Davis said, “From the start, the administration looked to take on China unilaterally. During a state visit in April 2018, French President Macron suggested teaming up. Trump waved him off and said, ‘I’ve got this one.’ I think a multilateral approach would be more effective. Beijing fears being isolated.”
“Throughout the trade war, Beijing had tried to capitalize on Washington’s alienation of its allies,” said Lingling Wei. “During a June 2018 meeting with multinational companies, President Xi Jinping made it clear that those companies whose home countries weren’t fighting with China would get preferential treatment from Beijing. But despite the lure of the Chinese market, many of the U.S.’s allies have the same concerns as Washington about China’s trade and economic practices. A coordinated approach could help Beijing realize that it’s in its interest to make the changes.”
Although Biden has not repudiated all of Trump’s trade policies, a multilateral approach, including working through the World Trade Organization, would represent a significant change from the Trump administration’s trade policies. Research by economists from the Federal Reserve Bank of New York and Columbia University found U.S. companies lost at least $1.7 trillion in the price of their stocks due to increased U.S. tariffs against imports from China. A policy that has proved harmful to American farmers, workers, consumers and companies appears ripe for change.