Businesses expected relief from Trump's poorly constructed trade policy. Guess what!
Businesses say Biden’s China Tariff Plan Fails to Provide Enough Relief.
The complaints are coming from companies that rely on Chinese electronic components and other parts to manufacture goods, from retailers that import shoes and skirts from China, and from people including Michael Mojica, who owns a camping-gear company in Englewood, Colo.
“Tariffs are just burdens on Americans’ backs,” he said. “It’s either small businesses paying it, which I am right now, or passing it to consumers so they are paying it.”
The tariffs were imposed by the Trump administration, which gradually expanded the levies to cover most imports from China.
The Biden administration has kept the tariffs in place and, following a long-awaited review, U.S. Trade Representative Katherine Tai said last week that the levies will continue for now.
“It’s disappointing that the administration didn’t go much further,” said Stephen Lamar, chief executive of the American Apparel and Footwear Association. “There are a number of other exclusions that are not on the table anymore.”
Denial of the Obvious
Biden, like Trump, seems to believe tariffs will bring jobs back to the US and force China to cooperate. In addition, it's more kowtowing to economically illiterate Progressives.
Bear in mind Trump carried out a policy endorsed by Bernie Sanders' union protectionism!
Trump supporters largely backed that. Amusingly, had Trump gone 180 degrees the other way, Trump supporters would have backed that too.
Most free market Republicans held their noses and closed their mouths not wanting to get Trump's wrath.
Results Are In
According to Chad Brown's US-China Phase One Tracker, China's purchases of US goods in 2020 end up 42 percent short of the legal commitment in the Trump administration's Phase One trade agreement.
China's purchases came up short in 2020 by
• 36% for agriculture
• 40% for manufacturing
• 61% for energy
Let's check in on the progress for 2021.
It might appear as if Trump made progress. He was only 42% short in 2020. But that 42% was largely the increase Trump wanted. In other words, Trump made no progress at all.
China agreed to a deal it had no intention of meeting, and didn't come close. We are on nearly the same path in 2021.
I commented on this before but it's worth repeating.
Chaotic and Ineffective
"The administration officials took pains to contrast Biden’s approach to that of his predecessor, which they called chaotic and ineffective. Biden seeks to shore up U.S. supply lines and promote domestic manufacturing while enlisting U.S. allies in a campaign to press China to drop the subsidies that distort global markets, the officials said."
Administration officials have discussed using Section 301 of a 1974 trade law to mobilize European and Asian allies for a WTO trade complaint over structural elements of the Chinese economy they say disadvantage its trading partners.
The above snips are from the Washington Post.
Section 301 of a the Trade Act of 1974
Let's now take a look at Section 301 of a the Trade Act of 1974, something I have not commented on before.
Prior to the Trump Administration and since the conclusion of the Uruguay Round of multilateral trade negotiations in 1995, which established the World Trade Organization (WTO), the United States has used Section 301 authorities primarily to build cases and pursue dispute settlement at the WTO.
However, former President Trump was more willing to act unilaterally under these authorities to promote what its Administration considered to be “free,” “fair,” and “reciprocal” trade. The recent use of Section 301 has been the subject of congressional and broader international debate.
The Trump Administration attributed this shift in policy to its determination to close a large and persistent gap between U.S. and foreign government practices that it said disadvantaged or discriminated against U.S. firms. In addition, it justified many of its tariff actions—particularly those against China—by pointing to alleged weaknesses in WTO dispute settlement procedures and the inadequacy or nonexistence of WTO rules to address certain Chinese trade practices. It also cited the failure of past trade negotiations and agreements to enhance reciprocal market access for U.S. firms and workers.
Polite and Ineffective vs Chaotic and Ineffective
Once again, Biden is marching down Trump's path of unilateral declarations.
The administration has even adopted Trumpian threats of boosting tariffs on China, much more politely of course.
In addition, Biden wants cooperation from European Allies.
What a hoot. Germany is bending over backwards to increase ties to China.
China was Germany's most important trading partner in 2020 for the fifth consecutive year.
US Trade Deficit Widens to Record Level as Imports Surge
On October 6, I noted US Trade Deficit Widens to Record Level as Imports Surge.
Note that the US trade surplus in services is steadily shrinking. It's down from a peak of $26.72 billion to $16.16 billion now.
The result is a record 73.25 billion net monthly deficit.
Giant Sucking Sounds, Mexico, NAFTA, Global Trade, and Gold
Everyone wants to export to the US, and they do.
Trump did not fix the problem and Biden won't either. Neither understands the basic problem.
The "absence of capital controls has made the United States the default adjustment for global capital imbalances."
Gold was that capital control mechanism and now there are none. Trade agreements with China are not worth the toilet paper they are printed on.
How much longer this setup can continue before it blows up in a currency crisis, war with China, or some other major economic disruption remains a key mystery.
For discussion and many charts please see Giant Sucking Sounds, Mexico, NAFTA, Global Trade, and Gold
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