Biden, Trump Embrace Weak Dollar and More Tariffs

WHO SAID ONLY DONALD TRUMP favored steep trade tariffs? Both Trump and Joe Biden have launched an all-out protectionist attack on China that is designed to resonate with unions and their members in crucial states like Pennsylvania.

WHO’S TOUGHER ON CHINA? That will be a crucial issue in pivotal electoral states — and both Biden and Trump are determined not to let the other out-flank them. Biden, it seems, may be just as protectionist as Trump. Neither candidate agrees with the view of most economists, who worry that inflation is a risk if these policies are enacted.

CAMPAIGNING THIS WEEK in pro-labor Pennsylvania, Biden advocated a steep hike on steel and aluminum exports from China, which produces about half of the world’s steel and is making far more than its domestic market needs.

CHINA SELLS STEEL on the world market for less than half of what U.S.-produced steel costs, senior Biden administration officials say; they fear China will dump cheap steel even more aggressively this year.

BIDEN IS CALLING FOR tripling the tariff rate on steel and aluminum imports from China; the tariff currently is 7.5%. He also has instructed his U.S. Trade Representative to investigate Chinese shipbuilding subsidies.

MOST UNIONS AND LIBERAL DEMOCRATS are fiercely protectionist; the United Steelworkers (USW) supports Biden’s aggressive attempt to oppose the sale of U.S. Steel to Nippon Steel, a merger that is unanimously opposed by U.S. unions. Biden said Wednesday that U.S. Steel “has been an iconic American company for more than a century and it should remain totally American.’

NOT TO BE UNDONE, Trump’s advisers are proposing a devaluation of the dollar as a method, they say, to make U.S. exports more competitive. This morning’s Politico describes the growing influence of trade hawk Robert Lighthizer, the former top Trump trade official who’s on the short list to become Treasury Secretary if Trump wins re-election.

LIGHTHIZER HAS LONG SUPPORTED A WEAKER DOLLAR, and would be willing to impose even stiffer tariffs to achieve lower trade deficits. Economists we’ve talked with believe this could lead to an escalating trade war with higher inflation, but that’s not a concern in either party right now. The concern right now is winning Pennsylvania.

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