Ahead Of His Summit With Xi, Biden Has a Strong Case to Maintain the Existing China Tariffs. But He’ll Be Hard-Pressed to Impose New Ones

Voters of all stripes overwhelmingly support the current U.S. tariffs on China heading into an anticipated bilateral summit between U.S. President Joe Biden and Chinese President Xi Jinping, per a Morning Consult survey conducted Oct. 15-19 among 2,000 registered voters in the United States. Voters’ support for the tariffs suggests that the Biden administration will have few incentives to remove them in the near future, even as the White House faces ongoing pushback from some U.S. companies.

But more tariffs are less likely to materialize, given Biden’s all-time low approval ratings and the electorate’s sensitivity, particularly among Democrats and independents, to additional tariffs’ impact on prices. Coupled with historically elevated inflation — which voters increasingly attribute to Biden administration policies — the U.S. government will need to tread cautiously in pushing tariffs further. 

Background

The news of the Biden-Xi summit comes after an Oct. 4 speech by U.S. Trade Representative Katherine Tai outlining the Biden administration’s long-awaited China trade policy amid a multiyear trade war. The policy seeks to restart trade talks with Beijing — the first of which occurred on Oct. 8 — while maintaining tariffs on $370 billion of Chinese imports. The Biden administration has also raised the possibility of imposing additional tariffs. 

The new policy’s reliance on tariffs — a holdover from the Trump administration — is noteworthy, given that existing tariffs on China are estimated to cost the average American household up to $1,000 or more per year. A broad swath of U.S. companies and business groups continue to lobby for the tariffs’ removal, highlighting their impact on the economy as they debate whether to absorb the tariffs or pass them on to consumers.

Biden’s case to keep relying on tariffs

Despite the existing tariffs’ impact on prices to date, 61 percent of U.S. voters, including 57 percent of Democrats, support keeping them in place. And 49 percent of voters overall also support imposing additional tariffs on China. 

Both findings make the Biden administration’s threat to continue leveraging tariffs as a negotiating tool more credible ahead of the upcoming summit, even as 3 in 5 voters agree that the existing tariffs have contributed to rising prices. U.S. Treasury Secretary Janet Yellen also alluded to the existing tariffs' potential inflationary impact in recent remarks to Reuters.

Voters’ views of the tariffs’ impact on the U.S. economy may explain their overall support for them despite the risk of rising prices: Half of registered voters, including 47 percent of Democrats, 45 percent of independents and 55 percent of Republicans, say that existing tariffs on China help the U.S. economy.

There are several plausible explanations for these responses, namely perceptions that the tariffs protect American jobs in import-competing industries and shield U.S. businesses from competition with Chinese companies.

What’s more, Democratic voters are virtually split on whether the existing tariffs hurt U.S. consumers (41 percent) or help them (38 percent), indicating that a sizable share of Democrats who say the tariffs have caused prices to rise do not actually perceive the increase as particularly harmful when it comes to personal consumption.

What could hold Biden back from imposing more tariffs

When it comes to the administration’s threat to impose new tariffs, Biden will nevertheless find it difficult to assume his predecessor’s “Tariff Man” mantle. 

U.S. voters, particularly Democrats and independents, are sensitive to the existing tariffs’ impact on prices — and are even more likely to be sensitive to the prospect of additional tariffs. A plurality of Democratic voters support reducing the existing tariffs if doing so would lower prices (45 percent) and a slightly larger share oppose new tariffs on China if they would cause prices to rise (47 percent). Independents are evenly split when it comes to the existing tariffs — 37 percent support their removal, while 38 percent do not — but a plurality share Democrats’ sentiment when it comes to new tariffs. 

Amid historically elevated inflation and the Biden administration’s all-time low approval ratings (per Morning Consult’s Global Leader Approval Rating Tracker as of Oct. 28), and a year out from the 2022 midterm elections, Democrats’ and independents’ views on tariff-induced price increases will likely cause the Biden administration to think twice about imposing additional duties. 

The Biden administration could still succeed in keeping the threat of new tariffs in its back pocket if it frames them as helpful for the economy. Relatively high shares of respondents — particularly Democratic voters — who said they did not know or had no opinion regarding questions surrounding the existing tariffs’ impact on prices and support for new tariffs suggest the administration has some chance of swaying Democratic sentiment in this direction. But keeping the existing tariffs in place and forgoing new ones is the safer option.

The most likely outcome and implications for companies

An exceptionally cautious Biden administration trade policy agenda (and midterm strategy) would eschew new tariffs entirely and rely on measures that are less likely to impact U.S. prices, such as threatening to more severely curtail Chinese businesses’ ability to list on U.S. equity markets and acquire U.S. companies. 

A maximal approach that includes tariffs in some capacity is more likely in the cards. But companies that would rather be done with the tariffs are not without recourse.

In particular, Morning Consult data suggests that companies lobbying the administration to remove existing tariffs or forgo new ones, as well as companies seeking waivers from the existing tariffs, can bolster their claims by emphasizing Democratic and independent voters’ perceptions of the tariffs’ impact on prices, especially if concerns around inflation exacerbate. The administration’s attention to price sensitivity among these voter segments is also likely to increase as the midterms get closer, especially if Biden’s low approval ratings persist.

By contrast, strategies that invoke the tariffs’ impact on the U.S. economy are more likely to fall flat due to voters’ overwhelming sense that existing tariffs are beneficial in this regard.

Appealing to voters’ price sensitivity to push back against the tariffs is not a surefire win: 50 percent of registered voters and 48 percent of Democrats said they have not altered their spending patterns over the past year because of the tariffs. This is good news for companies’ bottom line: It signals that any reduction in consumer spending attributable to the tariffs since their onset in January 2018 may have stabilized. But it also gives the Biden administration more leeway to continue leveraging tariffs to some companies’ detriment.