Trump’s tariffs on China have cost the US, but they look likely to stay
- In his recently released book, Donald Trump’s trade chief champions more protectionism despite continuing reports of the damage caused by the tariffs so far
- Unfortunately, the possibility of Trump in the White House again means the odds are against a withdrawal of these trade barriers
For trade liberals who have celebrated the global good arising from seven decades of falling tariff barriers – in particular the significant role this played in lifting hundreds of millions of people worldwide out of grinding poverty – there can be no arch nemesis more hauntingly remembered than Robert Lighthizer.
For trade, that meant imports were bad, exports were good and a trade surplus is essential; that plucky US entrepreneurs were pitched in a relentless, unfair battle against devious foreign cheats; that countries which cut tariffs and opened their markets were doomed to lose.
He believes the US should build tariff walls higher and restrict inward and outward investment. He wants China to be stripped of its normal trade status. He concedes this will impose costs on the US, but insists that these moves are needed to curb China’s rise and to rebuild US manufacturing.
The US Tax Foundation has noted the tariffs were “equivalent to one of the largest tax increases in decades”, reducing long-run GDP growth by 0.22 per cent and cutting 173,000 full-time equivalent jobs.
In a comprehensive analysis of the submissions to the USTR tariff review, the New York-based Council on Foreign Relations (CFR) found the tariffs “not only failed to achieve their objectives, but have hurt US businesses and consumers along the way”. It noted that the harm arising from the tariffs was “widespread, significant and counterproductive”.
After sifting out duplicates and those with fully redacted submissions, the CFR found that 917 out of 1,181 (more than 77 per cent) supported tariff removal, while 260 submissions supported their continuation. Most of the comments came from companies, with those supporting continuation tending to be firms facing keen international competition, while many of those wanting the tariffs to be removed were “downstream” companies struggling with the additional costs arising from the tariffs. The CFR concluded “the Trump tariffs have failed and the costs on the US economy continue to pile up”.
Is US sincere in wanting better relations with China? Its actions say not
The ITC audit and the USTR review are intended to help the Biden administration decide whether to keep the Trump tariffs. With Washington maintaining that Chinese trade practices remain “unfair, harmful and anticompetitive”, the issue will not be whether Biden should stay tough on China, but whether the tariff war is helping or hindering.
That will undoubtedly please Lighthizer, but what it means for US companies and consumers bearing the tariff costs, and for those of us concerned about the long-term harm to global trade, is another matter.
David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades.