Former President Donald Trump is weighing options for a major new economic attack on China if re-elected, considering plans that are widely seen as likely to trigger a global trade war.
Publicly, the Republican front-runner has advocated downgrading China's trade status with the United States – a move that would send tariffs soaring between the world's two largest economies. Removing China's “most favored nation” status for trade – which applies to almost all countries with which the United States trades – could lead to federal tariffs on Chinese imports of more than 40 percent, according to one analysis. Trump has proposed imposing a 10 percent tariff on nearly all $3 trillion in annual imports from all countries, including China.
Trump has privately discussed with advisers the possibility of imposing a blanket 60 percent tariff on all Chinese imports, according to three people familiar with the matter who spoke on condition of anonymity to disclose private conversations.
All of these options would cause enormous disruption to the U.S. and global economies, far exceeding the impact of the trade wars in Trump's first term, economists from both parties say. Although he often praised Xi Jinping as president and signed a trade deal with China in 2020, Trump has now repeatedly criticized Beijing on the campaign trail and has promised a tougher stance than President Biden.
Trump's determination to escalate trade battles with Beijing reflects the looming economic challenges of the 2024 election, as the former president appears increasingly certain of winning the Republican Party's nomination. Trump has floated some imaginative new ideas for his second term – such as building “freedom cities” in different parts of the United States with flying cars – but has focused primarily on tightening measures he implemented during his first term pursued, such as a strict crackdown on immigration. Corporate tax cuts and disruptive new tariffs on U.S. trading partners.
“The 2018-2019 trade war did enormous damage, and it would be so far beyond comparison that it would be hard to compare,” said Erica York, senior economist at the Tax Foundation, a right-wing think tank that opposes the tariffs. “This threatens to upend and fragment global trade on a scale we have not seen in centuries.”
A spokesman for the Trump campaign did not respond to requests for comment.
Biden has largely maintained the tariffs that Trump imposed on China as president in 2018 and has also imposed new restrictions on the Chinese economy, including new restrictions on semiconductors and other manufacturing equipment.
However, Trump promises to go further. In the White House and on the campaign trail, Trump has argued that import tariffs strengthen domestic industries while raising money for the federal government, ignoring or dismissing economists from both parties who say they raise costs for U.S. consumers and producers. Trump repeatedly brags about pouring billions of dollars into the US treasury through tariffs during his first term, even though he increased the national debt by around $8 trillion during his first term through increased spending and tax cuts. He also approved a rescue package worth about $30 billion to compensate farmers hurt by retaliatory tariffs imposed by China.
Despite the destabilizing effect of tariffs on the global and U.S. economies, Trump has promised to dramatically expand their use in a second term. He has initiated the imposition of a “universal base tariff” on virtually all imports or goods worth around $3 trillion, which would amount to a more than nine-fold increase in the amount of goods subject to tariffs compared to his first term. He has also talked about pushing forward legislation that would require the United States to automatically impose “reciprocal” tariffs on U.S. exports equal to those of all countries, which would almost certainly lead to a sharp rise in trade hostilities.
But Trump’s plans for China may be the most dramatic – and disruptive. Both publicly and privately, Trump has talked about his China tariffs as a major success of his first term — despite opposition from many Republican officials — and vowed to double down on that approach if re-elected.
China was the United States' third-largest trading partner in November after Mexico and Canada, accounting for 11.7 percent of total US foreign trade.
“I took on Communist China like no other administration in history, pouring hundreds of billions of dollars directly into our Treasury when no other president had literally gotten 10 cents out of China,” Trump said in New Hampshire , before winning that state's primary contest. “Nobody even tried. We raised hundreds of billions of dollars.”
Most economists say these costs were borne primarily by U.S. consumers and businesses, not the Chinese government or the Communist Party.
U.S. consumers and businesses would likely bear the brunt of a renewed trade war with China. In a report commissioned by the U.S.-China Business Council in November, Oxford Economics found that ending permanent normal trade relations with China would cost the U.S. economy $1.6 trillion and result in the loss of more than 700,000 jobs . However, several prominent Republicans in Congress have also supported the measure.
The United States imported about $550 billion worth of products from China in 2022, the most recent year with available data. The current average tariff rate on these goods was about 12 percent – Trump imposed 25 percent tariffs on about $150 billion worth of goods and another 7.5 percent on another $100 billion, while the remaining imports from China were taxed at about 2 or 3 percent tax rate on average, said York of the Tax Foundation.
Adam Posen, president of the Peterson Institute for International Economics, a Washington think tank, has called Trump's trade proposals “madness” and argued that such a crackdown on Chinese imports would hurt U.S. companies by depriving them of billions of potential customers.
“If a Trump administration were to impose much higher tariffs on imports from China, American companies would lose most of their market share both in China and in many third countries,” Posen said.
Trump and his defenders often argue that tariffs serve primarily as a strategic tool to force foreign adversaries to adopt deceptive trade practices. Policymakers from both parties now argue that China's economic policies — including the artificial devaluation of its currency to support exports — have undermined U.S. manufacturing, and Trump sometimes discusses tariffs as a way to force Beijing to change course.
“He believes that the tariffs he imposed in his first term brought great revenue to the American people,” said Newt Gingrich, a former Republican House speaker and an outside adviser to the former president. “I know from personal conversations with Trump that he firmly believes that tariffs can be used to negotiate from a position of strength, because we still have the largest market in the world.”
The Tax Foundation found that the Trump tariffs — largely left in place by the Biden administration — reduced long-term wages by 0.14 percent and reduced employment by 166,000 jobs. The Coalition for a Prosperous America, a group that supports the tariffs, has found that they help spur domestic investment with minimal impact on prices.
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