This article is part of our The Way We See It – The 2024 Election in Perspective series. Leading up to the November presidential and congressional elections, we will offer our thoughts and insights – not only on the political developments but also how the politics will shape the policy development in Congress. To get this bi-weekly communication directly to your inbox, subscribe to our Federal Policy updates here.
In 2018, then-President Trump imposed duties on a wide range of products from China and on aluminum and steel products from U.S. trading partners in Europe and Asia, totaling $80 billion in tariffs on products worth $380 billion. The Biden administration maintained these tariffs and, in May 2024, added another $18 billion on Chinese goods, impacting semiconductors and electric vehicles for an extra $3.6 billion in duties. Some exemptions were made for imports from certain allies. Estimates suggest these tariffs will reduce long-run GDP by 0.2 percent and the capital stock by 0.1 percent and will cut 142,000 full-time jobs.
With Election Day approaching, a pressing question is what lies ahead. The 2024 presidential candidates, Kamala Harris and Donald Trump, have outlined largely contrasting visions for U.S. trade policies, particularly regarding trade with China.
A Continuing Focus on China, but Different Approaches
China, the world's second-largest economy, has been a key U.S. and global trading partner since joining the World Trade Organization (WTO) in 2001. Over the past decade, U.S. trade concerns have evolved into a focus on strategic competition with China, seen as the United States' biggest geopolitical and economic rival. The U.S. government has addressed issues like unfair pricing, subsidies, economic coercion and intellectual property theft to uphold economic leadership and fair competition. This strategic focus enjoys bipartisan support and is unlikely to change in the foreseeable future, regardless of who occupies the White House and who is in Congress in 2025. The presidential candidates, however, have proposed different approaches to China trade.
Vice President Kamala Harris identified "tension" in the U.S.-China relationship as stemming from competition between the two nations but emphasized that "we are not seeking conflict" and referred to the U.S. economic relationship with China as "not about decoupling — it is about de-risking." This approach to the U.S.-China economic relationship has been reaffirmed by key U.S. government officials, including Including Secretary of Commerce Gina Raimondo and Secretary of the Treasury Janet Yellen. Harris intends to position the U.S. as "a leader in terms of the rules of the road" and to ensure that China adheres to these standards, a similar approach taken by the Biden administration through its use of unfair trade enforcement initiatives, such as banning imports linked to forced labor, providing countervailing unfair government subsidies, investigating duty evasion, and imposing "green" trade import requirements. While both candidates are expected to maintain the existing tariffs on Chinese products, the imposition of additional tariffs or any increase in existing tariffs may be the material difference between the candidates. Unlike Trump, Harris is also expected to encourage U.S. allies to adopt similar policies to increase pressure on China and prevent trade diversion.
Former President Donald Trump presents himself as a strong critic of China. In this election cycle, he has threatened to impose 60 percent tariffs on Chinese goods and proposed revoking China's Most Favored Nation status, phasing out essential imports from China and banning its purchase of U.S. farmland. As a self-proclaimed "dealmaker," Trump aims to use these measures to gain concessions from China, though his initial attempts had limited success and provoked retaliation.
Other Trade Policies
If Trump wins the presidency again, U.S. trading partners, not just China, may face new tariff threats. Trump's approach is mercantilist in orientation, even more so than during his first term. He suggests a 10 percent to 20 percent tariff on all imports and could use various legal authorities to enact this policy, such as Section 232, Section 301, the International Emergency Economic Powers Act, Section 122 and Section 338 of the Tariff Act of 1930. Additionally, he has threatened tariffs on companies that move production outside the United States. The overall goal of the tariff policy is to force relocation of businesses from overseas, which would further erode the post-war trading system. Some Republican members of Congress have already voiced objections to such an approach and are moving to control presidential tariff authorities through legislation.
Harris has firmly criticized Trump's tariff approach, arguing it would act as a $3,900 sales tax on Americans and cause price hikes and inflation. Rather than adopt a broad-brush tariff policy, she aims to calibrate the U.S. response to ensure fair trade, as well as commercial predictability and stability. Harris' broader economic policies suggest a focus on strengthening domestic production and reducing reliance on imports through various economic subsidies rather than tariffs. Harris would continue the use of trade laws to combat violations of international worker rights as well as to enforce environmental standards. At the end of the day, it seems that the candidates' perspective on economic policy will be, Harris focused on domestic industrial policy and leadership through unity with U.S. economic partners; Trump relying on protectionism not seen since the enactment of the Smoot-Hawley Tariff Act in 1930.
While the candidates' approaches differ, the broader consensus on U.S. trade policy – moving away from the vision of free trade – is unlikely to change drastically. Both parties continue to present a largely united front over China, and significant reforms to the WTO remain unlikely. Moreover, Trade Promotion Authority has long since expired, and the United States has largely abandoned the push for Free Trade Agreements (FTAs). Although Trump renegotiated NAFTA and initiated trade negotiations with the UK, Kenya and Japan, it is uncertain whether he would revisit these initiatives if reelected. Trump was also a proponent of strong digital trade rules to promote U.S. high-technology industries. His promotion of U.S. technology industries is certainly at odds with the present U.S. export control and sanctions environment that has severely restricted U.S. business in China concerning the technologies of tomorrow. Overall, his negotiating agenda had been more ambitious compared to that of the Biden administration, which has shown little to no interest in pursuing FTAs. Trump's preference for bilateral deals might see a revival of such negotiations, albeit selectively.
Additionally, the direction of certain Biden administration initiatives such as the Indo-Pacific Economic Framework (IPEF) and green steel alliance remains in question. If Trump wins, the future of these initiatives is likely in doubt, given his prior administration's historical skepticism toward multilateral agreements and environmental regulations. Harris, on the other hand, is expected to continue supporting and possibly expanding these initiatives, aligning them with her broader economic and environmental agendas.
Conclusion
With the 2024 election nearing, the contrasting visions of Kamala Harris and Donald Trump on trade policy reflect broader debates about the future direction of U.S. trade and economic strategy. Harris and Trump both would like to promote U.S. jobs and investment at home but disagree on the means to do so – tariffs versus economic subsidization. Trump surprisingly may be more open to cutting trade deals, while Harris is likely to continue her predecessor's initiatives such as IPEF. Whichever path is chosen will have profound implications for the U.S. economy, its international relationships and the global trading system. Companies should stay alert to changes in U.S. trade policies and remain engaged and vigilant in order to adapt.
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