By Omar S. Nashashibi, co-founder, The Franklin Partnership, LLC
The Biden administration’s policies toward China not only have geopolitical implications beyond US borders, but also are a direct factor in the November 2024 elections. An Ipsos August 2023 poll proves this point well.
Sixty-six percent of Americans are more likely to support a candidate who endorses additional tariffs on Chinese imports, while 53% want a candidate who will ban certain Chinese imports, even if that means paying higher prices. Gallup has annually surveyed Americans since 1996 about their opinions toward China, reaching a peak in 2017 with 50% favorable opinion. In 2023, only 15% of Americans hold that same opinion, with 84% having an overall unfavorable opinion.
Much can be said about the state of polling in US politics today, but few would question how voters, in general, feel toward policies of the Chinese Communist Party that runs China’s government. Few also would question many voters in manufacturing-heavy states that help decide a presidential election who want a Biden or Trump administration to demonstrate that it will take a tough-on-China approach. (We will presume for these purposes, that one year from now, Biden and Trump are their party’s nominee.)
The White House knows that Republicans already are readying attack lines that President Biden is weak on China – whether over Taiwan support, electric vehicles or critical technologies, such as artificial intelligence. Advisors to former President Trump have said that he would increase tariffs on China were he to return to the Oval Office in 2025.
At the start of the current Congress in January 2023, House Republicans created the Select Committee on the Strategic Competition between the United States and the Chinese Communist Party. The Committee has held field hearings throughout the country, and Senate Majority Leader Charles Schumer (D-NY) indicated he would like to move a China-focused bill in 2024 that could receive bipartisan support.
The American Mold Builders Association, for which The Franklin Partnership (TFP) lobbies in Washington, D.C., continues to push the Biden administration to maintain the 25% tariffs on imported Chinese molds, tools and dies, and succeeded in convincing the US Trade Representative (USTR) to maintain the tariffs as it reviews policy toward China. Former President Trump began imposing tariffs on China in July 2018, and President Biden decided to retain the tax on over 10,000 Chinese imports, including plastic injection molds, that AMBA successfully lobbied to have reinstated in 2019.
AMBA’s lobbying campaigns for both the Trump and Biden administrations focused heavily on the economic and national security importance of its members. However, TFP also strategically worked with lawmakers in key states of political importance for the upcoming elections to send a message directly to the White House – to keep the tariffs in place. This was key to success – understanding the political approach to public policy: in this case, the tariffs on China.
President Biden and his reelection team also are including a political approach to their China strategy. The US is in talks with the European Union (EU) about creating steel and aluminum tariffs on both excess imports from non-market economies and on carbon-intense products.
The US asked the EU to place a 25% tariff on steel and 10% on aluminum, which would cover 70% of the imports from non-market economies, such as China. This is among the top priorities for the steel industry and its unions, on which President Biden will rely to help him win a second term. This White House promotes itself as the most pro-union administration in US history, and the continuation and expansion of tariffs on Chinese products is a winning political issue, aside from the policy implications.
Whether it is an effort to drive union support or show strength behind American manufacturing, many in Washington, D.C. believe that President Biden will retain most tariffs on China. The Office of the USTR is conducting a four-year review on the effectiveness of Section 301 tariffs and, ultimately, if it should retain or lift the tariff action on imports from China, including molds, tools and dies. Reason one to keep and increase tariffs on China: Unions and manufacturing votes.
The second constituency President Biden aims to appease with this tariff policy toward Beijing is the environmental groups. Concurrent with the EU discussions over excess steel capacity from China, the Biden administration is in discussions with its counterparts in Brussels about creating a carbon-based tariff.
On October 1, 2023, the EU started its Carbon Border Adjustment Mechanism (CBAM) regime that requires importers of certain products, including iron and steel, to report on their carbon footprint. Starting in 2026, importers into the EU of select products including from the US, must purchase CBAM certificates, and regulators may expand those products by 2030 to include other imports.
Rather than create a carbon certificate or credit program, the US is looking to create a partnership with the EU, whereby both jurisdictions impose tariffs on imports based on the product-specific carbon footprint. Washington envisions a program that allows products carrying a carbon cost below a certain level to move tariff-free. Products manufactured in one of the countries that is part of the carbon club would face a lower tariff rate if they exceed the permissible carbon level, and those not in the carbon agreement must pay a higher tariff rate.
Currently, the proposal, known as the Global Arrangement on Sustainable Steel, is limited in scope, but many expect an expansion should President Biden win a second term.
This clearly targets countries such as China, which again helps President Biden politically with unions and manufacturing voters, but also with environmental groups that want to see reduced carbon from the industry. He is able to achieve two political goals through a tariff policy toward Chinese imports.
This, his team hopes, will help in the 2024 reelection campaign against his predecessor, who first implemented the tariffs. The political circumstances of 2024 only increase the position of AMBA, as it lobbies to retain the tariffs on Chinese molds, tooling and dies.
Sometimes, good politics makes good policy.
Omar Nashashibi is a founding partner at The Franklin Partnership, LLC, a bipartisan government relations and lobbying firm retained by the American Mold Builders Association in Washington, D.C.