Republican Presidential Candidates Talk Tariffs on China at Primary Debate
Republican presidential primary candidate Donald Trump denied reports that he plans on imposing a 45 percent tariff on all Chinese goods, but appeared to leave the door open for higher tariffs on China at the Jan. 14 debate. John Kasich echoed Trump in tone, if not policy substance, while Marco Rubio and Jeb Bush criticized Trumps’ tariff proposal as harmful to U.S. consumers and potentially resulting in Chinese tariff retaliation. Ted Cruz touted his proposal for a 16 percent value added tax (VAT) on imports as accomplishing the same thing as a tariff without running afoul of global trade rules.
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The New York Times reported Trump said he planned on a 45 percent tariff on Jan. 7 (see 1601080026). Asked about the tariff by debate moderators, Trump said the report was “wrong,” and he was only responding to a question about how the U.S. could pressure China over North Korea. The Washington Post subsequently posted a transcript of the New York Times interview (here).
Trump nonetheless continued to advocate during the debate for a tougher trade policy toward China. “We have very unfair trade with China,” he said. The 45 percent tariff would represent the amount “that we should get” based on Chinese currency manipulation. “What I’m saying is this -- I’m not saying we do it – but if this but if they don’t start treating us fairly and stop devaluing, and let their currency rise so that our companies can compete and we don’t lose all of these millions of jobs that we’re losing, I would certainly start taxing goods that come in from China,” said Trump. Trump also criticized U.S. trade negotiators, saying he would replace the current “political hacks” with businessmen.
Though distancing himself from the tariff proposal, Kasich said Trump’s sentiment “has got merit.” Countries are dumping their products in the U.S., taking “our people’s jobs,” but when the U.S. goes to “international court” it takes “a year or two to figure out if they’re cheating us.” If countries violate trade agreements or dump, the U.S. needs to stand up to those countries without making them into an enemy, he said. “I think we should be for free trade, but fair trade,” said Kasich, noting his support for NAFTA and the Trans-Pacific Partnership.
Rubio and Bush cautioned against the effects any tariff would have on U.S. consumers and exporters. “We are all frustrated with what China is doing,” but “need to be careful with tariffs” because they are passed onto consumers in the form of higher prices, said Rubio. Bush said China would retaliate with its own higher tariffs, which “would be devastating for our economy.”
Cruz said both sides had their points. China is “running over Obama,” but imposing higher tariffs would result in retaliation, said Cruz. He said the U.S. should instead impose a “16 percent business flat tax.” The tax would be “border adjustable,” meaning every export pays no taxes, while every import pays the 16 percent VAT. The tax would be “like a tariff,” but would not result in retaliation, given that China already imposes a VAT on U.S. goods, he said.