Top Story: Candidates Talk Trade Down The Stretch

Trade has taken a place of honor at rallies for both Presidential candidates.

In swing state Pennsylvania, former President Donald J. Trump said “tariff is the most beautiful word in the dictionary. More beautiful than love, more beautiful than respect.”

The FTZine staff isn’t sure about that. But the former President has offered tariffs as the solution to tax cut funding, paying for childcare, and filling other budget gaps.

Vice President Harris on the other hand has firmly criticized Trump’s tariff approach, arguing it would act as a $3,900 sales tax on Americans and cause price hikes and inflation. Rather than adopt a broad-brush tariff policy, she aims to calibrate the U.S. response to ensure fair trade, as well as commercial predictability and stability. Despite differing views on solutions, it is clear that trade will play a central role in either administration next year.

Vice President Harris’ policy speeches suggest a focus on reducing reliance on imports through government subsidies rather than import tariffs. The Vice President would continue the use of trade laws to combat violations of international worker rights as well as to enforce environmental standards.

Mr. Trump has threatened to slap steep tariffs on every country, especially China, to raise the cost of foreign products and try to reorder global supply chains towards U.S. sources. New tariffs would hit almost all U.S. imports, more than $3 trillion in merchandise.

His approach could help some companies that are already making their products in the United States, since they would make the cost of entry higher for overseas competitors. But they would simultaneously raise prices for U.S. manufacturers importing components from abroad.

Such a plan would not go unnoticed by our trading partners. In 2018 and 2019, governments around the world responded with tariffs of their own on U.S. products ranging from motorcycles to whiskey. The retaliation was particularly painful for American farmers, prompting the Trump administration to send them a $23 billion lifeline to help offset losses.

In recent months, government officials in Europe, Canada, China and elsewhere have already been drawing up lists of American products they may tax in return.

Vice President Kamala Harris’s campaign has said she plans to use tariffs in a “targeted” fashion. President Biden has maintained tariffs on more than $300 billion of products from China originally installed by the President Trump. It seems likely a Harris administration would maintain those as well.

Manufacturing firms are concerned that raising the cost of foreign parts and materials could hurt their efforts to make products in the United States.

For example, Kent International, a firm based in New Jersey that manufactures bicycles in China as well as in the United States, found itself in an odd situation after Section 301 tariffs on bicycles and bicycle parts from China were introduced in 2018.

Arnold Kamler, the company’s C.E.O., said President Trump’s 2018 tariffs on bicycles and bicycle parts, which were meant to help Americans, put the South Carolina factory at a disadvantage.

The company was able to obtain an exclusion from the tariffs for bicycles that were manufactured in China and imported whole, but it still had to pay a 20 percent to 25 percent tariff on bicycle parts that it brought over from China to be put together in its factory in South Carolina Mr. Kamler said.

Similarly, Kent International’s competitors could import complete bicycles from Taiwan or Vietnam without paying any of the China tariffs. That meant that a policy intended to help American manufacturers was actually putting the factory in South Carolina at a disadvantage. This is a story manufacturing FTZs know all too well. Neither candidate has proposed a solution to this problem, but raising tariff levels would exacerbate the disparity U.S. manufacturers face unless some form of domestic relief is enacted at the same time.