China tariffs pose risk for Trump in 2020

President TrumpDonald TrumpCapitol fencing starts coming down after 'Justice for J6' rally Netanyahu suggests Biden fell asleep in meeting with Israeli PM Aides try to keep Biden away from unscripted events or long interviews, book claims MORE's latest threat to impose additional tariffs on China poses a risky downside as he heads into a contentious reelection campaign.

The 10 percent tariff on $300 billion in Chinese imports is slated to go into effect Sept. 1, and it will cover an array of consumer goods such as clothing and electronics that were not previously subject to import taxes.


That means people could start noticing higher back-to-school shopping bills and price increases on popular electronic devices such as iPhones.

While consumers have largely been insulated from the harm of Trump’s trade war, the new tariffs could put a dent in household budgets as businesses pass on costs to their customers.

The tariffs would come just as data earlier in the day showed 164,000 jobs added in July, keeping unemployment at a low level of 3.7 percent, a nearly 50-year low. Meanwhile, consumer spending soared 4.3 percent higher in the second quarter, reflecting ample household confidence in the economy.

Trump is leaning on the strong economy to clinch another presidential term, but that could change if Trump’s new tariffs end up having dire implications for the economy, experts warn.

“Raising tariffs by 10 percent on an additional $300 billion worth of imports from China will only inflict greater pain on American businesses, farmers, workers and consumers, and undermine an otherwise strong U.S. economy,” said Myron Brilliant of the U.S. Chamber of Commerce, the country’s largest business group, which has frequently tangled with Trump on trade.

Trump has already imposed a 25 percent tariff on $250 billion of Chinese imports, but was careful to focus on intermediate goods, components and materials companies use to develop their final products.

The next round will likely hit people’s wallets directly, making them more dangerous for Trump's reelection efforts.

“These tariffs are mostly on consumer goods, so the impact here will be more directly on people’s purchasing power,” said Veuger, an economist at the American Enterprise Institute, a right-leaning think tank.

Veuger says that the tariffs all add up. A study by a Federal Reserve economist found that Trump’s tariffs were canceling out the effects of his signature tax cut for most families. 


“The order of magnitude here is not negligible. Since the start of the Trump admin, total tariffs have tripled,” Veuger said. “That’s pretty dramatic.” 

China has also warned that it will retaliate if Trump moves ahead with the new tariffs, likely targeting the ailing agricultural sector.

Beijing has already imposed tariffs on $60 billion in U.S. crops and livestock, hurting farmers already reeling from low commodity prices and severe weather.

Economists warn that Trump’s trade policy plays a destabilizing role in the economy, which is healthy after growing at 2.1 percent in the second quarter, but is beginning to flash a few warning lights in areas such as manufacturing.

The economy is also vulnerable to spillover effects from slowing growth abroad. The Federal Reserve on Wednesday cut interest rates for the first time since the 2008 financial crisis in a bid to protect the U.S. economy from a global downturn.

But for Trump, there's also a potential upside in the tariff threat as well. 

Trump is leaning on tariffs to pressure China into a trade deal, which could give businesses confidence to invest and expand in an already-strong economy.

In the president's view, good job numbers, a historically low unemployment rate and high consumer sentiment give him plenty of wiggle room when it comes to tariffs against China.

A threat to tax all Mexican imports, for example, helped Trump rush through a deal on immigration. He also credits the tariffs with upping pressure on Canada and Mexico to update the North American Free Trade Agreement. 

But many of Trump’s China tariffs have stayed stubbornly in place, with few results to show for them

And if they remain in place, the tariffs could deprive Trump of riding on the coattails of a booming economy.

The most recent Economist/YouGov poll found that 50 percent of respondents approve of Trump's handling of the economy, more than his handling of any other issue, and well above his overall 41 percent approval rating.

The fallout from Trump’s trade war has already given his Democratic challengers rare ammunition against the president’s economic record.

Several 2020 candidates cited the global uncertainty and domestic harm triggered by Trump’s tariffs in Wednesday’s primary debate in Detroit.

“Farmers are now looking at bankruptcy, soybeans rotting in the fields. Autoworkers may expect perhaps hundreds of thousands will be out of jobs by the end of the year,” said Sen. Kamala HarrisKamala HarrisRepublicans caught in California's recall trap Harris facilitates coin toss at Howard University football game Far-right rally draws small crowd, large police presence at Capitol MORE (D-Calif.). “He betrayed the American people. He betrayed American families.”