In the era of post-truth politics, tariffs on China have been packaged as a “win” for America. How deceptive is that?
Four years ago when Donald Trump separately set and escalated tariffs on goods imported from China, he said it would reduce America’s trade deficit. The fact is that America’s trade deficit with China hit record high in 2018. Plus, many economists agree that a value-added approach helps us understand how miscalculations happen, and who’s benefiting. Tariffs Hurt the Heartland, an American NGO, estimates that the total cost of Trump’s trade war against China has cost America $121 billion.
Another assertion from 2018 was that tariffs would help end China’s unfair trade practices such as state subsidies. The truth is all countries use industrial policies to help key domestic industries, including the U.S. Barack Obama gave $500 million to Solyndra, a solar company in California. Trump gave $12 billion in financial aid to American farmers. And Biden has pushed Congress to pass the largest industrial policy legislation in U.S. history to grow the country’s strategic industries — taking a page straight of China’s playbook.
Is the trade war good for America’s intellectual property protection as claimed? A quick answer is NO, as things change. China’s patent courts have progressed over the decades. Payments for the use of foreign technology have quadrupled since 2005. There is greater chance for foreign plaintiffs to win their cases.
It would be naive to say Biden administration is not aware of all above. Then why is he hesitating on lifting tariffs? He has to make sure there’s no chance domestic rivals can make a fuss — to blame his administration for being soft on China. The narratives have already spread; with a dangerously low approving rating and mid-term elections right around the corner, he can’t afford any risk.
As inflation increases and GDP growth falls in the second consecutive quarter, the U.S. economy shows signs of cooling. Easing tariffs on Chinese goods will lower prices for many consumer goods amid high inflation. So here is the inconvenient truth: the tariffs dilemma has brought more pain than gain to America. And Washington is holding the wolf by the ears.
YouTube: https://youtu.be/e-Z1vTEJOMQ
