Navigating the trade war: Trump and Biden's opposing strategies on China Tariff

As the U.S. presidential election draws closer, many are curious to see the differences in opinion each candidate has regarding the China tariff war. Both President Biden and Donald Trump have issued blueprints to compete against China. While Donald Trump is going all in, President Biden is opting for a more targeted approach. Let us examine the different trade strategies and how they affect U.S. consumers.

While President Biden and Donald Trump had polar opposite opinions on many policies, both parties surprisingly converge on their opinion to increase the tariffs of goods coming in from China. For this reason, President Biden has kept some of the tariffs which Trump imposed when he was in office, like the $350 billion tariffs which Trump imposed on Chinese goods.

What each of them pledge to do if they win the election?

Experts have described Biden's approach as more targeted - which means that he is applying tariffs on specific industries instead of just across the board. Sure enough, under the Biden administration, the tariff for EV went up from 25% to 100%, steel and aluminium products went from 7.5% to 25%, and solar cells from 25% to 50%. The White House announced that the new tariffs would amount to about $18B worth of products from China.

Donald Trump on the other has claimed that he is not afraid to slap on higher tariffs if he becomes the next president. 200% tax on every car that comes in from those plants… trump has also suggested to put a 10% levy on all global imports and that tariff goes to at least 60% of all imports from China roughly $460 billion worth of goods. Trump is saying that the tax cuts could help offset his plan tariff increases.

A common enemy but a different purpose

So what does the U.S hopes to achieve at the end of the road?

Is it to create more manufacturing jobs? To increase job opportunities in certain sectors? Or to decrease its reliance on China for certain goods?

While all of these issues are not mutually exclusive , they are distinct issues, some of which tariffs are better suited to addressing than others.

But when it comes to their attitude towards China, each candidate cannot have more different end goals. For Biden, he emphasised the need to strategically reduce their reliance on China to build a more resilient supply chain, particularly in critical sectors like semiconductors. This tariff thus acts as an acting hand to the U.S industry policy by focusing on the need to boost American manufacturing in specific sectors instead of outsourcing them from China. This explain why Biden's strategy involves increasing tariffs only on specific sectors, which is a stark contrast to the direction Trump is going for.

Trump's end goal of this tariff war is to address the trade deficit issue that has plagued the U.S economy for so long. Trump believes that the large trade deficit with China was central issues which contributed to the loss of manufacturing jobs and weakening of domestic industries. Trump's approach to slap high tariffs across the board and making imported goods more expensive thus helps to reduce the overall volume of imports from China, thus offsetting the trade deficit which the U.S has been facing.

China’s turning to Europe for help

Beijing has turned to Europe for a more accommodating stance on trade. Europe for what it’s worth does share broadly some the American concerns about Chinese economic practices. But there is still overall in Europe a resistance to go down the exact same road that the United States is going down when it comes to China.

U.S. consumers bearing the burden regardless of who prevail

Regardless of which proposal is objectively better, the sad truth is that the American consumers will always be the biggest losers of this tariff war as they are the ones who have to bear the burden of these tariffs. With the cost of goods soaring due to higher tariffs, importers and retailers will be passing these costs on to consumers.

Looking forward to the upcoming election, it seems that regardless of the outcome, American consumers will have to brace themselves for the impact of tariff wars.