What Were the Results of Trump's "Clear Choice" Policies (AKA, Tariffs on China)
The following is a portion of the contextual analysis for Section 2.6: Agency for International Development. These bite-sized briefs are intended to directly answer particular questions.
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Primorac goes on to praise Trump’s “Clear Choice” policies regarding trade with China, so let’s examine the results of those.
In 2018, President Trump fired the first shots by imposing tariffs on various Chinese products. China retaliated, imposing tariffs on American products. The war kept escalating — with each side making their tariffs higher and more expansive. [Source]1
Then, in January 2020, Trump met with Chinese Vice Premier Liu He and they both signed the “Phase One” trade deal, which was intended to prevent the trade war from escalating any further.
Here’s the weird part: The Trump administration had included a highly unusual provision in the agreement that instructed China to buy an extra $200 billion in American goods. That is, not only did they have to return to buying as much stuff from the United States as they did before the trade war, they had to agree to an additional $200 billion in spending above and beyond that. As of 2022, China’s deadline to buy $200 billion in additional American goods has passed, and China has bought none of it.
So, China didn’t hold up their end of the bargain, but by the same token, Trump’s trade deal was completely unrealistic. (Plus, the punishingly high tariffs on each side remained (and still remain in effect. The agreement didn’t end them, it just prevented them from going higher.)) The average tariff on goods at the time (2022) was about 20% on each side.
For Biden’s part, his administration has been trying to make China live up to their end of the deal2.
Add up the fact that China didn’t live up to the deal plus the fact that the tariffs were passed to American consumers despite Trump’s claims to the contrary3, and it turns out that the loser of the trade war between the U.S. and China was the U.S. Other nations benefited, though:
“When China levied large tariffs on American soybean growers, for example, Brazil, Argentina, and other soybean exporters filled in the gap. When China levied large tariffs on imports of lobster from Maine, he says, Chinese consumers began purchasing more lobster from Canada. Some manufacturing commerce also likely left China and headed for neighboring countries, like Vietnam, Thailand, or Malaysia.”[Source]1
Despite Trump’s claim that “trade wars are good, and easy to win”4, he certainly managed to botch this deal. Part of the reason for that is that he famously doesn’t understand how tariffs work5, but people like Max Primorac should know better.
From linked article 3:
“Economists told us, however, that real-world examples of tariffs working as intended are rare, and consumers of the tariff-levying country are the primary victims of tariffs, by having to pay higher prices. The federal treasury does get paid when tariffs are levied. But Chinese exporters don’t make the payment. The importers do — usually U.S. companies.
“If the U.S. imposes a tariff on Chinese televisions, the duty is paid to U.S. Customs and Border Protection at the border by a U.S. broker representing a U.S. importer — say, Costco,” Howard Gleckman, a senior fellow at the Urban Institute-Brookings Institution Tax Policy Center, wrote in September. “The Chinese government pays nothing.”
This means that when Costco has to pay more to import Chinese televisions, they’re going to jack up the price of Chinese televisions in their stores to cover that loss, meaning that you pay for it when you buy the goods.
Need more?
“Numerous studies have found that U.S. companies primarily paid for U.S. tariffs, with the cost estimated at nearly $46 billion. The tariffs forced American companies to accept lower profit margins, cut wages and jobs for U.S. workers, defer potential wage hikes or expansions, and raise prices for American consumers or companies. A spokesperson for the American Farm Bureau stated that “farmers have lost the vast majority of what was once a $24 billion market in China” as a result of Chinese retaliatory actions.” Source: The Brookings Institute6
“A January 2021 study commissioned by the U.S.-China Business Council (USCBC) claims that former president Donald Trump’s trade policies cost the United States 245,000 jobs.” Source: The Carnegie Endowment7
“Although President Trump has persistently claimed that China is paying billions of dollars in tariffs imposed on Chinese imports to the United States, empirical evidence indicates that U.S. consumers are bearing the cost of the tariffs: $51 billion in increased prices and a net loss of $7.2 billion to the U.S. economy.” Source: William & Mary Business Law Review8
I cannot stress enough how awful the trade policies Primorac is praising in this section are, and they are Trump’s trade policies that he’s promising more of if he gets elected9.
Sources Cited:
- Rosalsky, Greg (February 15, 2022), China promised Trump a better deal for America; it didn’t actually deliver, NPR.
- Shalal, Andrea; Lawder, David (February 7, 2022), Exclusive: U.S. calls for ‘concrete action’ from China on trade deal, Reuters.
- Jacobson, Louis (May 14, 2019), Who pays for US tariffs on Chinese goods? You do, Politifact.
- Deaux, Joe; Mayeda, Andrew; Olorunnipa, Toluse; Black, Jeff (March 1, 2018), Trump Says Trade Wars Are ‘Good, and Easy to Win’, Bloomberg.
- Kristian, Bonnie (October 22, 2020), Trump vividly reminds us that he doesn’t know how tariffs work, The Week.
- Hass, Ryan; Denmark, Abraham (August 7, 2020), More pain than gain: How the US-China trade war hurt America, The Brookings Institute.
- Pettis, Michael (January 28, 2021), How Trump’s Tariffs Really Affected the U.S. Job Market, The Carnegie Endowment.
- Chow, Daniel C.K.; Sheldon, Ian M. (2021), Understanding the Ecoomic and Political Effects of Trump’s Tariffs, William & Mary Business Law Review, Vol. 12 (2020-2021), Issue 2 (2021).
- Irwin, Neil (September 9, 2024), Trump is more locked in on tariffs than ever before, Axios.