Biden, Trump China Tariffs Draw On Old, Losing Playbook

(MENAFN- Asia Times) As Joe Biden throws down the gauntlet in his bid to defeat Donald Trump, the US president risks repeating one of his predecessor's biggest blunders.

This week, Biden will unveil plans to quadruple taxes on Chinese electric vehicle (EV) imports and slap
huge tariffs
on other key industries. The new levies on mainland EVs will reportedly skyrocket to 102.5%. Other priority industries could see tariffs double or triple.

It's Biden's latest ploy to out-Trump Trump, and ultimately a losing ticket in terms of raising American living standards. It also risks provoking China to retaliate in ways that backfire on US consumers and investors.

Biden's desire to relive 1985 arguably makes sense from a political standpoint ahead of the November 5 election. That is the era during which levies of the kind Biden is mulling – and Trump used from 2017 to 2021 – might have worked.

In 2024, though, Team Biden is endeavoring to protect an economic system that no longer exists. Just as Trump did during his time in the White House, back when he imposed taxes of at least 10% on all mainland goods and others on steel and aluminum.

With Trump telegraphing 60% tariffs on Chinese goods in a second term, Biden's administration is clearly trying to avoid appearing easy on Asia's biggest economy. Yet trying to kill China's EV market isn't the way to do it.

For starters, it's unclear that Biden's EV tariff plan would even make much of a dent. One issue, as Asia Times business editor
David Goldman argues , is that currently no Chinese cars are even on offer in the US right now.

Many economists are calling it“economic symbolism” that will do more to placate Elon Musk than slow China's rise. The Tesla founder has warned that without big tariffs, Chinese automakers will“demolish” the global competition.

Higher tax rates will have“minimal near-term economic impact” because of the“extremely low penetration of Chinese EVs in the US market today,” says Evercore ISI analyst Sarah Bianchi.

A wiser strategy would be supersizing Biden's earlier efforts to rekindle US innovation and increase productivity. With his
CHIPS and Science Act
and inflation-reduction legislation, Team Biden moved to build economic muscle at home and put the US back in the tech race for 2025 and beyond.

Silicon Valley has long since lost its disruptive mojo. The lion's share of the“innovation” emanating from California and other US tech centers is on ways to sell more web and smartphone advertising.

The Trump years were something of a lost period for raising America's competitive game. Trump did more to bring back coal and browbeat Detroit to make less fuel-efficient cars than reboot growth engines. His giant tax cuts did little to incentivize investments in innovation and productivity-enhancing reforms.

In trying to look tougher on China than his rival, Biden clearly learned the wrong lessons from the Trump era. Tariffs will just increase already high US consumer prices.


Asia Times

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.