May 16, 2024

Tariffs on China

U.S. President Joe Biden on Tuesday unveiled steep tariff increases on an array of Chinese imports including electric vehicle (EV) batteries, computer chips and medical products… Biden will keep tariffs put in place by his Republican predecessor Donald Trump while ratcheting up others, including a quadrupling of EV duties to over 100% and doubling the duties on semiconductor tariffs to 50%...

“‘American workers can out-work and out-compete anyone as long as the competition is fair, but for too long it hasn't been fair,’ Biden said during a speech in the White House Rose Garden before unions and companies. ‘We're not going to let China flood our market.’” Reuters

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From the Left

The left is generally supportive of the new tariffs.

“All governments place their thumb on the scale to promote their national industries to some degree. China’s thumb simply weighs more heavily. A 2022 study by the Center for Strategic and International Studies in Washington conservatively estimated that China spent $248 billion supporting its industries in 2019. That’s twice as much as the United States did…

“​​‘It’s the whole financial system, the whole economic system that is leveraged for industrial policy, which is very different than what’s been happening in market economies,’ Camille Boullenois, an analyst of Chinese industry at the research firm Rhodium Group, told me… The Biden administration’s steep new tariffs are a rational response to Xi Jinping’s aggressive economic policies.”

Michael Schuman, The Atlantic

“Why can’t the United States just accept cheap goods from China? The concerns about community disruption caused by the first China shock still apply. But there’s also a new issue: climate change. The goods being subjected to new or increased tariffs are mainly products associated with the transition to green energy… Given the existential threat posed by climate change, the political coalition behind the green energy transition shouldn’t be fragile, but it is…

“The Biden administration was able to get large subsidies for renewable energy only by tying those subsidies to the creation of domestic manufacturing jobs. If those subsidies are seen as creating jobs in China instead, our last, best hope of avoiding climate catastrophe will be lost — a consideration that easily outweighs all the usual arguments against tariffs. So in imposing these new tariffs, Biden’s people are doing what they must. I don’t see any alternative.”

Paul Krugman, New York Times

Some argue, “Wealthy Americans are the only ones who can afford the electric vehicles currently on the market, which cost over $55,000 on average… Low-cost Chinese models that lower- and middle-income Americans could afford — like BYD’s Seagull, which runs for less than $10,000 — aren’t currently sold here largely because of tariffs over 25 percent. The new tariffs of 100 percent will make it even harder for these cars to compete in the U.S. market…

Middle-class Americans should have access to [EVs], and because of these tariffs, they will remain a luxury… The Biden administration is right that climate policies must work for the people of Detroit and Pittsburgh as much as they work for well-off Tesla drivers. But to accomplish these goals, it ought to be taxing China for its soaring carbon emissions, not for its electric vehicles and solar panels, which for now, at least, the United States needs badly.”

Gernot Wagner and Conor Walsh, New York Times

From the Right

The right is critical of the new tariffs.

The right is critical of the new tariffs.

Trade policy toward China remains largely for show… [The] Trump tariffs didn’t address the different paths by which Chinese-made goods reach the US. One path in the news now is to report shipments as so small in value (‘de minimis’) that they escape tariffs. De minimis shipments aren’t well monitored, but their raw number climbed sharply from 2018 through early 2024, and China generates the majority…

“Another tactic to avoid tariffs is transshipment: producing a good mostly or entirely in China and then shipping it via another country. Such a good is labeled as being from Vietnam or Canada, say, and doesn’t face the same tariffs… An electoral tariff race—25, no 60, no 100 percent—is meaningless unless de minimis and transshipment restrictions are offered, with harsh sanctions for repeated violations.”

Derek Scissors, American Enterprise Institute

“The White House says the tariffs will cover $18 billion worth of goods combined. That’s not nothing, but for perspective, $18 billion is equal to 4 percent of total U.S. imports of goods from China last year… China’s $18 trillion economy isn’t going to miss $18 billion… [But] these tariffs at least make a little more sense when you understand them as political favors to labor unions

“Biden is clear that his radical environmental policies, including pushing electric vehicles on a scale that the public does not desire, are all part of his plans to boost organized labor, constantly touting the ‘union jobs’ that his environmental schemes will create. He no doubt thinks union voters will be important to his efforts to win swing states such as Michigan and Pennsylvania… Biden is protecting industries close to government while performing for his pals in organized labor, not being tough on China.”

The Editors, National Review

“[Free-trade skeptics are] correct that there are national-security exceptions to free trade, and they are correct that China presents a threat to U.S. national security. But it does not follow from those two facts that tariffs on China are smart and necessary…

If something is truly a national-security threat, it should not be counteracted with tax policy. That’s not what tax policy is for. The U.S. has countless [other] legal and diplomatic tools at its disposal to punish its adversaries economically and protect Americans…

“Only 1 percent of U.S. EV sales are from China. If the Chinese are using unfair trade practices to infiltrate the U.S. EV market, they are failing. If the U.S. is concerned about the Chinese infiltrating the U.S. EV market, it should scrap all policies that mandate the sale or subsidize the purchase of EVs and allow automakers to sell cars according to market demand.”

Dominic Pino, National Review

A libertarian's take

“When he was campaigning four years ago, Joe Biden offered voters an alternative to the flawed protectionism and expensive tariffs of the Trump administration. ‘We're going after China in the wrong way,’ he said at one point during that successful run at the White House. On other occasions, he (correctly) highlighted how Americans were bearing the brunt of then-President Donald Trump's tariffs…

“With the prospect of a rematch against Trump looming in November, the Biden administration announced Tuesday that voters won't be getting that choice this time around… [Instead] they will face a choice between two men who have used their presidential powers to hike import taxes on American businesses and consumers (one of whom is campaigning on a promise to use tariffs even more aggressively in the future). Now would be a good time for Congress to claw back some of the trade policy power it has delegated to an increasingly irrational executive branch.”
Eric Boehm, Reason

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