- Biden imposes $18 billion tariffs on Chinese imports
- Tariffs expected to have minimal economic impact
- Move seen as politically advantageous amid election season
This week, the United States and China fired their latest salvo in the ongoing trade war, a move that coincides with a heated campaign for the White House.
On Tuesday, US President Joe Biden announced $18 billion in tariff increases on imports of various Chinese products.
Lithium-ion batteries comprise $13 billion of the overall imports, with medical gloves and syringes, in addition to specific steel and aluminum products, accounting for the remaining $5 billion.
Experts anticipate that tariffs on these goods will have minimal impacts on consumer goods prices and economic expansion. They argue that Biden may realize the greater benefit at the polls as he vies for a second term in the White House.
“The economic effects of these tariffs are negligible; they amount to a rounding error.”
Yaros further stated that although the impact of the tariffs on the US economy is minimal, such action remains “politically sound,” particularly in an election year.
Demonstrating fortitude
The United States will hold a presidential election in November, with Biden expected to compete fiercely against his predecessor, former Republican President Donald Trump.
His Democratic opponent has been characterized as “weak” in contrast to Trump’s longstanding effort to project a tough-man image, especially in the areas of foreign policy and the economy. Conversely, Biden has endeavored to divert that critique by implementing policies that, to some extent, expand upon those of Trump.
A January paper (PDF) from the National Bureau of Economic Research argues that tariffs may generate “substantial job gains” but still yield political benefits.
The study examined the time span between 2018 and 2019, during which President Trump imposed severe tariffs on China and various other nations, with solar panels, washing machines, and aluminum among the targeted commodities.
Researchers found that residents of US regions subjected to higher import tariffs were less likely to identify as Democrats and more likely to vote Republican.
Voters “reacted positively” to the tariffs “notwithstanding their economic burden,” which manifested as retaliatory tariffs from China, according to the report’s findings.
Yaros stated, “Tariffs are good for politics despite the fact that they fail to function economically.
Captivating the Rust Belt
Some polls indicate that Biden and Trump are in a razor-thin race, with the Republican candidate edging out the incumbent in crucial swing states.
The Philadelphia Inquirer, the New York Times, and Siena College conducted a poll this week that showed Trump leading in key states like Arizona, Nevada, and Georgia.
Last month, Biden made an appearance in Pennsylvania, one of those states, to declare his intention to impose triple tariffs on Chinese steel. Pennsylvania, located in the Rust Belt, a historically significant manufacturing region, has gained notoriety for its steel manufacturing industry.
According to Brad Setser, a senior fellow at the Council on Foreign Relations, Biden has also endeavored to safeguard the rapidly expanding electric vehicle (EV) industry in the United States.
Setser explained that his new trade regulations will prevent the United States from directly importing Chinese-made electric vehicles.
He further stated that substantial government subsidies have supported China’s development of a formidable electric vehicle (EV) industry. Without these measures, the country could potentially inundate the international and American markets with cheap automobiles.
“China subsidized its EV industry heavily due to its substantial automobile requirements, which has contributed to this sector’s strength,” Setser explained.
“It must acknowledge that the United States and Europe will employ certain strategies [such as tariffs and subsidies] to develop their own industries.” It is impractical for China to raise objections to other nations engaging in similar activities.
Additionally, protecting the American automobile industry will benefit Biden in the surveys. Michigan, another crucial battleground state where Biden has recently encountered opposition, has traditionally been the center of the sector.
The “uncommitted” movement, which advocated for Democrats to abstain from supporting Biden in the primaries and instead select the “uncommitted” alternative, originated in Michigan.
The protest reflected a broader, predominantly progressive backlash against Biden’s unwavering support for Israel’s conflict in Gaza.
Ahead of the month of November
The United States imported $427 billion worth of commodities from China in 2023 but only exported $148 billion in return, according to the United States Census Bureau.
This trade deficit has endured for decades and has gained increasing sensitivity in Washington, especially in light of China’s competition with the United States for the title of the largest economy globally.
“Invest in your future with Webull UK – get started with free shares.”
Although the trans-Pacific trade has been advantageous for both nations, offering Chinese manufacturers access to a substantial market and inexpensive goods for American consumers, it continues to be a contentious issue, particularly during election seasons, due to the historical trend of American manufacturing jobs being relocated overseas.
US legislators have raised privacy concerns in light of the introduction of Chinese technology into the North American market.
Experts predict that China’s retaliation for the most recent round of tariffs will be symbolic, given the highly targeted nature of the United States’ tariffs.
Yaros stated, “We do not anticipate that the retaliation will be disruptive in any way.” “They will not be raising the stakes.” They had never operated in this manner before the United States imposed tariffs.
