I usually disagree with all of Joe Biden’s economic policies which is the reason I am caught so off guard by one that I approve of: tariffs on a range of Chinese goods.
Chinese – US trade has grown substantially since the 2001 inclusion of China in the World Trade Organization, a strategic blunder in my view as it has primarily benefited China at the expense of the US.
In that admission, the Chinese agreed to market access to China for foreign manufacturers, protections for intellectual property, and transparency around trade laws and regulations. None of this materialized.
BTW, the US has only had “normalized” relations with the People’s Republic of China, the Red Chinese, the Communists, since 1979.
Bit of perspective, please?
US exports to China in 2023 were $148B.
US imports from China in 2023 were $427B.
This is a gigantic trade imbalance. China is accused of targeting specific industries to dominate, all currently dominated by the United States.
Fair question. First, recall that the American economy, the American marketplace, is the largest and most lucrative marketplace in the world. Access to the US market has generally been a free trade shibboleth meaning there is no real price of entry. Tariffs can be that price of entry.
Tariffs can make free trade into fair trade and that is a damn good thing. Fair trade.
Tariffs are fees imposed on goods manufactured overseas and sold into that market. Again, price of entry.
Let’s review why tariffs are a useful tool for the American economy.
1. Tariffs are used to protect strategic American industries like high tech, steel, aviation, or semiconductors.
2. Tariffs are used to protect fledgling, startup businesses. Cite your own examples.
3. Tariffs are used to punish bad actors — talking to you China and your intellectual property theft, your currency manipulation, your closed markets, your environmental atrocities, and your slave/child labor.
There are those who will say that tariffs are a tax on the ultimate consumer, the ultimate American consumer. They are partly right, but mostly wrong.
If you are contemplating the purchase of an electric vehicle or a semiconductor, the US tariff on Chinese goods may direct your purchase to a more attractive Made in America alternative. This drives sales of American made products.
This can rock entire industries. Why do you think all those foreign car manufacturers — BMW, Mercedes, Jaguar, Volvo, Toyota, Hyundai — built manufacturing plants in the US? Might it be to avoid tariffs that might have made their foreign produced offerings unattractive?
This — the wholesale move of foreign car manufacturers to American based operations — created massive amounts of jobs and had a huge positive impact on the US economy. Tariffs in this instance were brilliant policy.
Ahhh, yes, the details.
Here is a rundown of Joe’s new tariffs (authorized under the 1974 Trade Act Section 301).
1. Electric vehicles tariff will increase from 25% to 100%. Ouch. Many Senators, such as Sherrod Brown, want Chinese EVs banned in the US in part because of their data collection threat.
2. Lithium EV batteries tariff will increase from 7.5% to 25%.
3. Photovoltaic cells — solar power — tariff will increase from 25% to 50%.
4. Critical metals tariff will increase from 0% to 25%.
5. Ship-to-shore cranes — used to unload cargo and containers at US ports — tariff will increase from 0% to 25%.
6. Medical syringes and needles tariff will increase from 0% to 50%.
7. Personal protective equipment (PPE) tariff will increase from 0% to 25%. PPE was a hot button issue during the COVID pandemic when China refused to allow PPE manufactured by American companies in China to be delivered to the United States.
8. Semiconductor tariff will increase from 25% to 50%.
Ahhh, dear reader, there is an election in what? Six months!
Some of these individual tariffs can be viewed as a quid-pro-quo for campaign financial support and some are a paen to the leftist green movement.
Donald Trump, the Republican nominee, has said he would impose 60% on Chinese goods — everything.
This is a particularly unexpected move by Joe Biden as his administration recently extended COVID era exceptions to Section 301 tariffs to a myriad of Chinese goods.
Section 301 provides the authority for the American President to act ” . . . to respond to unjustifiable, unreasonable, or discriminatory foreign government practices that burden or restrict U.S. commerce.”
It has a complaint provision in which any aggrieved party can petition the government to investigate and act upon any bad acts by a foreign government.
Recently — a month ago — five labor unions filed a complaint against the Chinese government’s attempt to cominate the maritime, logistics, and shipbuilding sectors. They asked for an investigation into Chinese actions, policies, and practices targeting these sectors.
These labor unions are critical supporters of the Biden campaign and he is more than willing to advance their cause.
Fine, dear reader. Here’s the bottom line.
Sometimes good policy comes on the heels of political considerations. Joe Biden’s actions are clearly political, an attempt to reward donors, shore up support from the greenies, and to kow tow/pander to his union bosses.
It is, however, a very good policy. The Trump chap would make the tariffs 60%.
But, hey, what the Hell do I really know anyway? I’m just a big red car, made in the good old USA. USA!
