“I promise to you,” President Joe Biden said this week in a speech at the AFL-CIO’s annual convention, “for as long as I have this job, I will be the most pro-union president in history.”
He’s got the credentials to say that to this crowd because he’s delivered on many of its priorities: a sizable investment in infrastructure and a significant expansion of Buy America rules. And it’s not insignificant, for example, that he has hosted Amazon Labor Union leaders in the Oval Office. That’s the kind of tone-shifting gesture that can improve organizing conditions on the ground.
But he’s being urged by some in his administration to do something many of those unions don’t want: cut Chinese import tariffs.
Organized labor has made it known that it expects those tariffs to remain in place. But its concern might not affect the simple reasoning being done by White House advisers. The high inflation gripping the economy is a huge political drag on the president, and his options for addressing it are limited. And those advisers say doing something, however ineffective, is better for his fortunes than doing nothing.
Something they appear to be settling on is scrapping some of the Section 301 tariffs facing a large volume of trade with China.
This is a serious mistake that should be seen coming from miles away. Not only would lifting those tariffs reward an uncooperative economic adversary, but it would also damage important constituencies at home.
And lower tariffs won’t dent the high prices facing consumers.
That’s not to say inflation isn’t a problem. It clearly is, but the price spikes we’re faced with — in things such as fuel, airline tickets, and dairy products — aren’t in product categories affected by the tariffs.
That’s why the models and analyses produced by free-trade advocates typically show a Chinese tariff cut would return a marginal reduction in costs facing working Americans. Even in the rosiest scenarios, we’re talking about a fraction of a percentage point shaved off the consumer price index — not exactly the kind of improvement that will significantly boost the president’s approval rating before the midterm elections.
Someone would be made happy by this — multinational corporations, perhaps, and Chinese President Xi Jinping. But wage earners aren’t going to appreciate a better quarterly return for companies listed on the New York Stock Exchange.
Those tariffs were earned by decades of complete disregard for international trade rules by the Chinese government, which led to rampant cyber intrusions, intellectual property theft against U.S. manufacturers, and the loss of more than 3 million factory jobs over the course of approximately 17 years.
They originally went up under the Trump administration in 2018, and they haven’t yet altered Chinese trade policy. China still uses industrial overcapacity as a cudgel against its firms’ competitors. It still unfairly subsidizes key industries and maintains lax environmental and labor standards.
But China still wants them removed because they represent a shift in American focus. Allowing an authoritarian state unfettered access to the U.S. market is no longer an acceptable status quo, and the bilateral U.S.-China trade relationship must be improved. That’s another very good reason not to remove them: We shouldn’t abandon important trade leverage against the Chinese government to shave a rounding error off the CPI. That trade-off won’t be appreciated by voters.
We’d only gain a little and lose a lot, which is the argument labor leaders made in a recent letter to the U.S. trade representative. Lifting tariffs will mean increased import competition from a state that isn’t playing fairly. And there will be domestic economic costs to doing so. Factories will close, jobs will be lost, and paychecks won’t arrive. That will cause economic pain to union households, a crucial part of the president’s political coalition. Exposing them like this would be a great way to sap their political enthusiasm.
Biden should ignore the bad advice he’s getting on tariffs. And he should know it’s coming from the same groupthink that believed two decades ago that lower tariffs would help China blossom into a thriving, rules-based economic collaborator. That crowd was wrong then, and they’re wrong today. Keep the tariffs in place, Mr. President.
Scott Paul is president of the Alliance for American Manufacturing.
