GULKER: A Rollback Of Trump’s China Tariffs Would Be A Win For American Consumers

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Max Gulker Contributor
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Editor’s note: We endeavor to bring you the top voices on current events representing a range of perspectives. Below is a column arguing that rolling back Trump’s China tariffs will represent a win for American consumers. You can find a counterpoint here, where TPPF’s Chuck DeVore argues that rolling back the tariffs would harm the country.

President Joe Biden is reportedly ready to begin rolling back some of the $370 billion in tariffs that his predecessor Donald Trump placed on Chinese imports in 2018 and 2019. Better late than never, Mr. President. The policy change would be a win for American families strained by inflation and an economy still trying to recover from the COVID-19 pandemic and ongoing supply chain interruptions.

Less than four years ago, in Dec. 2018, former President Trump declared himself a “Tariff Man” in an infamous tweet. “Trade wars are good and easy to win,” Trump claimed as he escalated a trade war with the Chinese government, announcing new tariffs of up to 25% on an expanding list of imports.

Trump’s signal that he was happy to keep ramping up the trade war was no empty threat — he spent the next year extending the tariffs to almost all Chinese imports while wrongly claiming China would foot the bill. Unfortunately, it is always consumers who pay the costs of tariffs.

“Increased tariffs will increase prices for customers,” Walmart Chief Financial Officer Brett Biggs said in 2019.

Best Buy CEO Hubert Joly told Reuters, “The impact of tariffs at 25 percent will result in price increases and will be felt by US consumers.”

Tariff Man’s legacy was imposing billions in taxes on American importers, businesses and consumers, with little evidence of gains to the domestic industries the former president said he sought to protect. Economists overwhelmingly disagreed with Trump’s tariffs. Even before the economic shock of the pandemic, Americans began feeling the economic damage of Trump’s tariffs when they paid more for cell phones, washing machines, toys, aluminum and steel.

“We have repeatedly stated that this tariff is a tax on every washing machine buyer in the U.S.,” a Samsung spokesman told The Wall Street Journal. “Since the tariff was implemented, U.S. consumers have paid more for their washing machines across all brands.”

At this point of his presidency, Biden shares responsibility for the cost increases being passed on to consumers. He has now presided over these massive tariffs for almost as long as Trump. Rolling back, or, better yet, eliminating Trump’s tariffs, should have been a top priority from when Biden assumed office. Instead, the tariffs continue to add costs to consumer goods during a record-setting inflationary period.

Even now, Americans seem to be getting utterly tepid first steps from Biden. The White House is only reportedly planning to reduce tariffs that impact about $10 billion worth of goods. The administration is also purportedly looking at a new process for companies to apply for tariff exemptions, which might reduce more tariffs but would certainly roll out the red carpet for cronyism.

One reason Biden isn’t getting rid of the tariffs is that both major political parties have decided that it is good politics to blame China and free trade for policies and changes some Americans don’t like, so we cannot wholly ignore the generation-long shift in American demand for labor from manufacturing to service and high-tech industries.

Factory closures in small towns and rural America are often incorrectly blamed on free trade rather than a longer-term seismic shift in the U.S. and global economy. Still, far too many economists have taken a flawed path in battling misconceptions pushed by protectionists. Free traders make arguments like “laid-off workers will just transition to new industries,” which are unsatisfying to long-time factory workers and others. Downplaying or ignoring how long and complex such transitions are for some workers and communities helps set the table for protectionists and politicians willing to make false promises to “bring the jobs back to America.”

Another misguided argument for tariffs is that trade restrictions are strategic political tools that force bad actors like the Chinese government into better policies. But brutal crackdowns by the Chinese government on protestors in Hong Kong since tariffs were enacted can’t be ignored. “The Trump administration appears to have made less progress than previous administrations in changing Chinese behavior and at a substantially greater cost. By its own preferred measures, its China trade policy has not been a success,” Phil Levy, the senior economist for trade for President George W. Bush’s administration, wrote.

There are millions of transactions between American and Chinese people and businesses daily. Global trade is not a zero-sum showdown, as politicians like to suggest. U.S. consumers benefit from the lower prices of free trade with China. And even if the Chinese government benefits from that trade, so do its people, whose prosperity and empowerment will do far more in the long run to reduce bad actions than the sticks and carrots of the U.S. government.

The last few years have been a vivid reminder that tariffs raise prices and hurt American consumers and businesses. Rather than being tough on China, the tariffs are tough on Americans. It is time for President Biden to help reduce high prices by making large and broad reductions in tariffs.

Max Gulker is a senior policy analyst at Reason Foundation.