Trump called himself a 'tariff man.' Biden looks like one too.
Former President Donald Trump drew scorn when, in 2018, he declared, "I am a tariff man." But Trump may just have been ahead of his time.
President Biden on Tuesday took a page from Trump’s playbook, announcing the steepest set of tariffs on Chinese products since Trump waged his trade war in 2018 and 2019. In an interview with Yahoo Finance, Biden said these actions were "about saving American jobs."
There are differences between the two packages, but each 2024 presidential candidate is using China as a bogeyman to win key votes in a handful of swing states.
Biden will raise or impose new tariffs on steel, aluminum, semiconductors, electric vehicles, EV batteries and components, solar cells, cranes, and medical products imported to the United States from China.
That might sound like a long list, but it’s actually very targeted. Biden is basically raising the cost of certain imported products in key industries where he’s trying to build out domestic supply chains.
Trump, in a slight contrast, was busy imposing tariffs on roughly half of all Chinese imports to the United States, an outdated-sounding idea rooted in an earlier century before the world globalized.
Some of Biden's new tariffs are modest, while others are steep.
The tariff on EV batteries, for instance, will go from 7.5% to 25%, which might keep them cheap enough to stay on some US manufacturers' order lists. But the tariff on Chinese-made EVs will quadruple from 25% to 100%, which is basically an effort to price them out of the US market completely.
The tariffs do fit with Biden’s focus on reviving domestic manufacturing.
In his first two years as president, Biden signed into law major packages of incentives to stimulate more American production of semiconductors, green energy products, and other types of goods. He’s now pairing punitive measures — tariffs — with those incentives, which were mostly structured as tax breaks.
Biden, importantly, has also left the Trump tariffs on Chinese imports in place.
Those were more widespread than what Biden is imposing now, covering thousands of product categories. Trump was less focused on reviving any particular industry and more focused on simply lowering the US trade deficit with China, a fixation that many economists deemed odd and even pointless.
Trump has also promised even steeper tariffs on Chinese products if he beats Biden in November and wins a second term. His latest plan is an across-the-board tariff as high as 60% on all Chinese imports, with a new 10% tariff on all imports from everywhere else.
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All these developments are distressing to free traders because they raise costs and reduce efficiency with no economic payoff. There’s certainly a political payoff, however — or at least the candidates hope there is.
"For Biden, the tariff announcement is all about the election, as it supports his industrial policy agenda and further builds his tough-on-China resume," Beacon Policy Advisors explained in a May 13 analysis. "The announcement continues the trend of pursuing trade policies aimed at the Rust Belt."
Pennsylvania, Michigan, and Wisconsin are key swing states a presidential candidate basically has to win these days to reach the magic number of 270 electoral votes.
Biden has been aggressively courting blue-collar workers in those states, joining a picket line with striking auto workers last year, as one example. He calls himself the most pro-union president in American history and has fashioned policies and legislation to back that up.
Trump’s approach is more scattershot. He vilifies China as a destroyer of American jobs and paints himself as savior-in-chief, with less focus on aiding specific industries.
Trump tried using steel and aluminum tariffs to aid those domestic industries, but his policies weren’t as targeted as those of Biden, who, for instance, will impose a new 50% tariff on medical syringes to help boost US production.
The irony of all this economic flag-waving, however, is that protectionist policy doesn’t necessarily help the US economy.
One 2021 study found that Trump’s tariffs killed 245,000 jobs on net, mainly by driving US production costs higher. More expensive imports probably contributed to the inflation surge that began in 2021. A 2022 study found that cutting the average import tariff by just 2 percentage points would have cut the inflation rate by 1.3 points.
Biden obviously chose not to make such a move, which indicates how important it has become for a president to convince voters he’s tough on China.
Instead, he’s imposing more tariffs that future studies will probably show did more harm than good. Economically, that is. Politically, it seems both Trump and Biden think imposing tariffs on China is a winning strategy.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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