Trump, Harris Endorse Tariffs on China, With Differing Approaches

News Analysis

Regardless of who wins the White House in November, tariffs against China are here to stay. That’s the consensus in Washington, although Democrats and Republicans have different approaches. Meanwhile, who bears the cost of tariffs remains a topic for debate.

The Trump administration imposed tariffs on more than $300 billion worth of Chinese goods to respond to an array of unfair trade practices, including intellectual property theft.

Former President Donald Trump has repeatedly said on the campaign trail that he would raise China tariffs to 60 percent and apply at least 10 percent tariffs to goods imported from other countries.

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During a Sept. 5 speech at the Economic Club of New York, he credited protective tariff policy for “opening up a higher and better destiny” for Americans.

“We have to take care of our own nation and her industries first,” he said, while alluding to tariff rates “higher than people had heard in the past.”

Vice President Kamala Harris’s position on tariffs is less clear, but they’ll be retained if she keeps the current administration’s policies. The administration will announce its final tariff determinations, initially scheduled for the end of August, in the coming days.

Tariffs are a “key piece of the solution,” if used in conjunction with other trade and industrial policies, to allow for domestic investments in critical industries, according to Nick Iacovella, a senior vice president at the Coalition for a Prosperous America, an advocacy organization exclusively representing manufacturers that have productions in the United States.

“Countries around the world are starting to recognize that China’s overcapacity is having a serious negative impact on their industrial capacity. So they are taking steps like the U.S. to put tariffs on Chinese goods,” Iacovella told The Epoch Times.

“That’s going to continue whether we have a Trump or a Harris administration.”

Who Bears the Cost of Tariffs?

When the Trump administration imposed tariffs on Chinese goods in 2018, they were unpopular among many economists. Conventional free trade theory considers tariffs a market distortion that reduces competition and market efficiency and slows economic growth. In this view, tariffs also raise retail prices to varying degrees, effectively reducing consumers’ net income.

Erica York, senior economist with the Tax Foundation, a tax policy watchdog, told The Epoch Times that the potential of multiple groups—exporters, importers, and retail consumers—sharing the burden of tariffs “doesn’t change that tariffs are a policy overall that reduces incomes and output.”

Paula Mints, the chief analyst of SPV Market Research, a research firm specializing in the solar industry, said tariffs impact different sectors differently.

“We are starting to have a domestic industry. We are just starting to have it. It’s because of the tariffs, manufacturing incentives, and domestic content incentives attached to the demand side,” Mints told The Epoch Times.

She said the tariffs now work with the accompanying incentives for manufacturers to locate in the United States. “The Biden administration has used them to level the playing field.”

William Lee, chief economist at the Milken Institute, an economic think tank based in California, calls himself “one of the few economists who actually considers tariffs as not so bad.”

He said the real-world market, which is different from an ideal world where free trade is the best solution, has distortions, such as government subsidies. Therefore, if used correctly, tariffs can be another distortion that makes things right.

Tariffs come at a cost because they raise the prices for U.S. importers and consumers, Lee said.

However, “the strategic need dominates the costs,” he told The Epoch Times. “The strategic need to have diversified industries in certain sectors, such as high-tech industries, became so important after COVID.”

Now that Democrats and Republicans agree on the policy goal of safe and sound supply chains, Lee thinks tariffs “will be used in a much more strategic way.”

These include creating accompanying domestic incentives to protect critical industries rather than using tariffs only to save jobs in a declining sector. And also using tariff revenue to compensate any groups that take a severe hit from price increases caused by tariffs.

Differences Between Trump and Harris

Although both political parties agree that tariffs against China should be used to curb its dumping practices, their policies and approaches may still differ.

Mints thinks the Trump administration viewed tariffs in a “retaliatory and aggressive way,” and that would be carried into a second term.

“One big difference is that the Trump administration doesn’t seem to believe that tariffs are passed onto anybody, and the Biden administration at least understands that you’re going to raise costs for the buyers,” she said. She hopes a possible Harris administration would view tariffs more strategically.

Lee thinks Democrats tend to issue more government direction regarding where the money from tariff-companion domestic incentives goes and how it’s used, while Republicans give businesses more discretion. However, the flexibility without production requirements may not help American competitiveness.

He said the key is that people need to know tariffs and the associated protection are temporary. If the next administration sees that tariffs hurt specific consumer segments or businesses, they should use part of the tariff revenue to subsidize these groups.

Derek Scissors, chief economist of research firm China Beige Book and a senior fellow at the Washington-based think tank American Enterprise Institute, also observes two different approaches.

“The [Biden] administration’s position seems to be that tariffs are needed in light of China’s behavior while Trump used them as a negotiating tool,” Scissors told The Epoch Times.

He said he prefers quotas to tariffs because quotas target “more directly at concerns about Chinese predation and American dependence.”

“In supply chains, quotas would take the form of content limits, singling out Chinese participation rather than targeting all producers,” Scissors said.

Iacovella believes a second Trump administration would “go further on tariffs and industrial policy than a Harris administration” because Trump “has a greater understanding of the China threat.”

He is delighted to see the conversation about tariffs shifting from whether they are necessary to how they can be best implemented.

“I think it’s very important that everyone recognizes that regardless of who becomes president, it will be a pro-tariff administration.”

John Haughey contributed to this article.