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Biden signals China and working class with tariff threat

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WASHINGTON — During his more than three years in office, President Joe Biden has reversed Donald Trump’s actions on immigration, climate and a long list of other areas.

However, higher tariffs continue to apply to Chinese imports.

Not only has Biden kept Trump’s tariffs in place on some $300 billion of Chinese goods; this week he also threatened to triple a 7.5% tariff on Chinese steel and aluminum to 25%.

According to trade experts, this move has as much to do with the 2024 elections as it has economic implications.

Biden is sending a signal to the United Steelworkers union — in an appeal to working-class voters — that he hears their complaints that China has an unfair advantage in steel competition. And Biden is calling China out on what the Biden administration calls Chinese manufacturing overcapacity: producing more products, including steel, than demand can absorb at home or around the world, leaving global markets at artificially low prices are flooded.

“Part of it is the ’24 election and part of it is to let China know that we are watching them closely for the risks of overcapacity, not just in the steel sector, but in other sectors as well,” says Doug Rediker, a senior fellow in the Global Economy and Development program at the Brookings Institution.

China ‘too big for the rest of the world’, says Yellen

China’s steel imports represent only about 0.6% of total U.S. steel demand, meaning the higher tariffs would not dramatically impact the U.S. steel market. But government officials have hinted that other potential trade moves could target other sectors

The US is taking “nothing off the table” in response to China’s excess capacity, Treasury Secretary Janet Yellen recently told CNN’s Fareed Zakaria in an interview.

Last week in Beijing, Yellen told Chinese leaders that the U.S. is concerned that “weak household consumption and corporate overinvestment” pose “significant risks to workers and businesses” in the U.S. and around the world.

Yellen pointed to new technologies such as electric vehicles, lithium-ion batteries and solar panels as other areas where China has excess production.

“China is now simply too big for the rest of the world to absorb this enormous capacity,” Yellen said, adding that “we have seen this story before” regarding steel.

“More than a decade ago, massive government support from the People’s Republic of China led to below-cost Chinese steel, flooding the global market and decimating industries around the world and in the United States. I have made it clear that President Biden and I will not accept that reality again. ” said Yellen.

Biden’s U.S. Trade Representative, Katherine Tai, will launch an investigation into Chinese trade practices in shipbuilding following a United Steelworkers petition alleging that China is pursuing aggressive non-market policies that have allowed it to dominate the global market.

Biden said in a speech at the United Steelworkers Union headquarters in Pittsburgh this week that if the investigation confirms “competitive trade practices,” he will advise Tai to triple tariffs.

Biden’s tariff push is based on the trade playbook of Trump, the Republican presumptive nominee, who routinely raised tariffs on Chinese goods during his four years in office, sparking a trade war between the world’s two largest economies.

“It’s one of the few areas of policy continuity between the Trump and Biden administrations in terms of taking a pretty tough line on China as it relates to trade issues,” said Allen Carlson, an associate professor of government at Cornell University and an expert on the Chinese foreign policy.

Still, Biden is trying to differentiate his tariff approach from that of his predecessor, decrying Trump’s campaign tariff proposals as “blanket tariffs on all imports from all countries that could seriously harm American consumers.” Biden said Trump’s tariff plan would cost the average American family an average of $1,500 a year.

“Trump just doesn’t get it,” Biden said. “I’m not looking for a fight with China. I’m looking for competition, but fair competition.”

Election year politics play a role in rate changes

The US steel industry has been rocked by the planned $14.9 billion sale of Pittsburgh-based US Steel – an iconic American brand for more than a century – to Japan-based Nippon Steel Corp. Biden pledged that US Steel will remain wholly American-owned. comments in Pittsburg.

“It will happen, I promise you,” Biden said.

Ahead of the November election, Biden wants to improve Democratic performance with white working-class voters without college degrees, who have increasingly moved to the Republican camp in the Trump era.

Although several unions, including the United Steelworkers, are backing Biden again, many rank-and-file union members have bucked the leadership to support Trump in the last two elections.

“It’s an election year. And being tough on China is an issue that resonates with both Republicans and Democrats,” Carlson said. “And so I think this probably has as much, if not more, to do with domestic politics than it does with any kind of strategic approach to dealing with the rise of China.”

The price of Chinese steel exports is approximately 40% lower than the price of American exports. The higher tariffs are intended to provide a “more level playing field against China’s unfair trade practices” and protect American jobs in the steel industry, a Biden administration official said.

The higher tariffs would apply to Chinese steel and aluminum imports that are not subject to a Trump-era 25% tariff that is still in place on certain steel imports.

With Chinese imports accounting for less than 1 percent of U.S. steel, the White House expects no impact on inflation, which has remained stubborn in recent months.

U.S. tariffs in response to another country’s trade practices are nearing the conclusion of a four-year regulatory review. Any formal action to raise these issues would follow the review.

Amid Americans’ continued concerns about inflation, Biden has sought to make an economic case for working-class voters, whom both he and Trump are courting in key battleground states in the Midwest. On the campaign trail in Pennsylvania this week, Biden compared his “Scranton values” to Trump’s “Mag-a-lago values” — portraying the former president as an outrageous elitist who wants to cut taxes for the wealthy and does didn’t. The production boom he promised cannot be achieved.

And Biden claims that he, not Trump, is the president who held China responsible.

Biden said his administration is “standing up against” China’s excess capacity, reviving trade partnerships in the South Pacific and supporting peace and security in the Taiwan Strait. He said he told Chinese President Jinping Xi that advanced technologies made in the US will not be sent to China because “you will use them for the wrong reasons,” undermining US national security.

“Despite all this tough talk about China,” Biden said, “it never occurred to my predecessor to do something like this.”

Reach Joey Garrison at X, formerly Twitter, @joeygarrison

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