President Trump’s tariffs on Chinese goods present a dilemma for Joe Biden.
If he were to fulfill his campaign promise to get even tougher on China, Biden would feel pressure to maintain the tariffs, even though he’s faulted Trump for the pain the levies have inflicted on businesses and farmers.
Yet if he were to lift the tariffs, he could be accused of going soft on China.
While Biden in a 2019 speech blasted Trump for the tariffs, the former vice president’s campaign website does not include a specific solution regarding tariffs and China. His campaign did not respond to a question about his forthcoming trade policies.
Since taking office, Trump has unilaterally imposed tariffs on a variety of Chinese products, and China retaliated by imposing its own tariffs on U.S. imports. The result increased consumer costs by roughly $57 billion annually, according to the American Action Forum, a right-leaning think tank.
The dilemma for Biden is that tariffs can be effective in swaying the fate of trade relationships between countries, but that advantage comes at the cost of businesses and consumers taking a financial hit.
More than a third, 37%, of small businesses had increased costs from the tariffs in 2019 before the pandemic hit the nation, according to the online business marketplace BizBuySell. Over half of those businesses passed the increased cost to consumers, but the remaining 46% lost sales because of the tariffs.
Another issue adding to Biden’s dilemma is that China is not likely to remove its tariffs irrespective of what he does.
“They don’t seem to be in the mode of coming to the table with conciliatory gestures in the interest of changing the tone of things,” said Dr. George Calhoun, a professor at the Hanlon Financial Systems Center at the Stevens Institute of Technology, a private research university in Hoboken, New Jersey.
Whatever Biden might do with Trump’s tariffs, some experts think he should not only keep them but replace them with more forceful mechanisms.
“Tariffs are not the solution, they’re a solution,” said Todd Leebow, CEO and president at Majestic Steel in Cleveland, Ohio.
“There’s a need to continue to evolve where we’re going in terms of trade,” he said, adding that a Biden administration can’t simply replace the tariffs with nothing.
Harry Broadman, a former chief of staff of the Council of Economic Advisers in the George H.W. Bush administration and former U.S. assistant trade representative under President Bill Clinton, thinks one possible replacement for tariffs is forcing China to make good on the promises it made when it joined the World Trade Organization in 2001.
“You don’t have to be a trade guy like me to figure out that these guys have not instituted these promises,” he said.
Broadman said a more harsh enforcement for China might be to make good on those promises or be kicked out of the WTO. One promise China has yet to keep is to treat all trading partners equally.
“China can’t have its cake and eat it too,” he said, referring to unkept promises while remaining in the WTO.
Broadman acknowledges that righting wrongs within the WTO can be time-consuming, meaning that the tariffs could remain in place for quite some time. He also thinks that if a Biden administration involves other countries when dealing with China, there could be a speedier outcome.
Trump took a unilateral approach in applying his tariffs, which prompted China to respond in kind.
“I welcome, frankly, the fact that Trump became tough on China. The thing is, he used the wrong tools and did it alone,” he said.
