Electioneering tariff talk belies the reality

There has been plenty of hoopla about the effectiveness of tariffs when it comes to correcting what in the eyes of US policymakers is unfair trade imbalances. Particularly so when it comes to trade ties with China, which they now take as the United States’ foremost competitor, which must be contained at any cost.

The previous Donald Trump administration initiated a trade war against China, imposing 25 percent additional tariffs on Chinese imports worth $300 billion in 2018. Having inherited those tariffs, the Joe Biden administration has chosen to keep them intact.

This is because, in US Trade Representative Katherine Tai’s words, the US saw “strategic value” in keeping the tariffs in place to reinvigorate US manufacturing. The Biden White House has bragged about previously outsourced manufacturing flowing back to the US, inflation being tamed, and more jobs having been created.

Trump, who is now the Republican front-runner for the party’s presidential nomination for the coming presidential election in November, recently promised to impose a flat tariff rate of 60 percent on all Chinese imports and to increase by 10 percent the tariffs on all other imports if elected.

But neither US consumers, nor manufacturers, support the tariffs. Despite Tai’s claim that the tariffs have boosted US domestic manufacturing, US Bureau of Labor data show their contribution to job creation was less than impressive last year.

Jay Timmons, president of the National Association of Manufacturers, for one, has seen how those tariffs have worked against US manufacturers. “Before any elected official or appointed officials starts talking about how good tariffs are, they need to look at the results of how these tariffs have been applied to some manufacturers here in America, and how that’s actually cost jobs for American manufacturing workers,” he said.

Instead of serving the purpose of spurring US manufacturing, the tariffs have driven up manufacturing costs and consumer prices, he said. He wanted them removed because they “created a system where a drill coming in from China that was fully assembled, is less expensive than a drill that’s assembled here, because of the component parts that are being tariffed coming in”.

“This is not just a shot you get to take without … getting return fire,” he said. His solution is simple and aligns well with economic common sense — negotiating a “rules-based enforceable free trade agreement”.

China has repeatedly urged the US to promote the sound and steady growth of China-US economic and trade ties, stressing they are mutually beneficial and win-win in nature, and serve the fundamental interests of both countries and peoples.

With the two parties vying to show they will be tough on China, which is now de rigueur on the campaign trail, trade and tariffs are likely to be increasingly in the spotlight in the run-up to the US presidential election. But it is to be hoped that the positive signals that emerged from the recent meeting of the two countries’ respective Economic Working Group can be maintained in their next meeting penciled in for April despite all the rhetorical jockeying for the election limelight.

If the US does ramp up the tariffs, the outcome, as Timmons observed, will only be a vicious tit-fortat exchange of fire.