Democrats divided on tariffs amid woes over inflation
Faced with mounting inflation and bad poll numbers, Democratic lawmakers are divided over whether to get rid of Trump-era tariffs on hundreds of billions of dollars in goods imported from China, which some Democrats think would lower costs for consumers.
Vulnerable Democratic senators from two key battleground states, Arizona and Nevada, are worried in particular that the administration may wind up slapping penalties on Chinese manufacturers of solar panels that have expanded their operations into Southeast Asia.
But tariffs on foreign imports are popular with labor unions and with voters in key presidential swing states such as Michigan, Ohio and Pennsylvania — states that could decide who controls the White House after the 2024 election.
The debate within the Senate Democratic Conference is made more complicated by divisions within the Biden administration.
Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo favor easing tariffs, while national security adviser Jake Sullivan, Agriculture Secretary Tom Vilsack and U.S. Trade Representative Katherine Tai oppose dropping tariffs on China, according to a New York Times report published Monday.
The political divide is reflected among Democratic lawmakers, who have competing interests heading into the midterm elections and are just beginning to discuss what to do about tariffs while they still control both chambers of Congress.
Sen. Maria Cantwell (D-Wash.), the chairwoman of the powerful Senate Commerce Committee, on Tuesday questioned the effectiveness of tariffs on Chinese goods and said that easing tariffs could help reduce inflation, which has become the Democrats’ biggest political problem.
“The tariffs haven’t been as effective as they think,” she said, adding that easing tariffs “could help relieve on some of the costs that people are seeing.”
“I hope that they’ll consider it,” she said.
Sen. Mark Kelly (D), who is facing a tough reelection race in Arizona, expressed concern that a Commerce Department tariff investigation on solar panels imported from Cambodia, Malaysia, Thailand and Vietnam could have a major impact on his home-state economy.
If the investigation concludes that solar panels imported from these countries used Chinese parts that should have been subject to tariffs, it could result in huge retroactive tariffs — in some cases exceeding 200 percent, experts estimate.
“We have a big solar industry and we’ve got supply-chain issues and that’s why a lot of costs are high,” Kelly said Tuesday.
“The bigger concern right now is that because of the investigation the suppliers in those countries just decided because of the possibility of retroactive panels, they’re not going to ship any more panels,” he said. “We’ve got Arizona companies that are really worried about the future and to be able to start projects or complete projects.”
The debate within the administration over what to do about Trump-era China tariffs and the Commerce Department’s investigation into whether the China solar industry tried to avoid U.S. tariffs by operating through Southeast Asian countries are two sides of a bigger question: What to do about the importation of Chinese goods at a time when costs are soaring in the United States?
Several Democratic senators told The Hill Tuesday that they are beginning to discuss tariffs and economic policy toward China more seriously.
Sen. Catherine Cortez Masto (Nev.), another Democratic incumbent in a tough reelection race, said she’s also worried about new tariffs on solar industry imports.
“I just got off the floor talking about the solar industry and why we need to support the solar industry,” she said.
“We need to make sure we don’t chill the solar industry right now. I’ve got workers in jobs on projects that are stopped in my state because it’s been chilled. There’s got to be this happy medium of how we still hold China accountable but at the same time still move forward toward a cleaner [environment],” she added.
Cortez Masto noted that 80 percent of the solar panels used in the United States come from other countries.
“The Nevada solar industry is the largest in the nation. The industry supports more per capita in my state than any other and many of those are union jobs,” she said on the floor Tuesday. “They’re on hold right now and nothing is moving forward right now.”
But supporters of domestic manufacturers in the industrial Midwest, a part of the country that was crucial to President Biden’s 2020 election victory and will be critical to him winning a second term, aren’t rushing to repeal Trump-era tariffs on Chinese imports.
“Everything is being looked at” as part of the Democratic effort to fight inflation, Sen. Debbie Stabenow (D-Mich.) said, acknowledging that tariff relief is on the table. “There’s a whole range of things we’re looking at.”
She said she has “concerns” about repealing Trump-era tariffs because she wants to promote domestic manufacturing.
Asked whether the Trump-era tariffs truly help create American jobs, she said “that’s the big question right now.”
“Industry by industry, it affects some differently, but I have a lot of concerns,” she said.
Other Democrats are leery of easing tariffs on China at a time of rising tension over the future of Taiwan and the South China Sea and after China declared a “no-limits” partnership with Russia.
“I think if there’s tariffs with China, we ought to be looking at doing business with somebody else,” said Sen. Jon Tester (D-Mont.). “I would look at the tariffs and see how they impact agriculture, but I’m not inclined to pull them off.”
“I think China’s doing things that aren’t good,” he said.
Major industry groups are getting involved in the debate, as well.
The National Association of Manufacturers is pushing the administration and Congress to revise China tariffs to ease the pressure on mounting supply costs.
“There’s a real need to have a robust exclusion process and allow companies on all sides to engage, provide input and make their case for why exclusions [from tariffs] are necessary to provide targeted relief that manufacturers in the United States need,” said Ken Monahan, vice president of international economic affairs at the National Association of Manufacturers.
He argued that providing tariff waivers for U.S. manufacturers that rely on imported supplies “will certainly support bringing down costs impacting industry at this time.”
The U.S. Chamber of Commerce is also pressing the Biden administration to lift the tariffs.
“The Chamber’s stance has long been to push for the removal of damaging 301 tariffs,” said a U.S. Chamber spokesperson. “We’re encouraged that President Biden is giving serious consideration to removing tariffs, particularly those that impact consumers and businesses. As inflation continues to soar, hard-working American families and small business deserve to have more money in their pockets to pay their bills and sustain their businesses.”
Lori Wallach, the director of the Rethink Trade program at the American Economic Liberties Project, said representatives of industrial states such as Pennsylvania and Ohio — key presidential swing states — want to promote American manufacturing and combat dumping by Chinese solar manufacturers.
“Talk to [Sen.] Sherrod Brown [D-Ohio] or Sen. [Bob] Casey [D-Pa.], who are very invested in trying to create a domestic clean energy manufacturing,” she said, noting that proponents of domestic manufacturing argue that building the U.S. industrial base will insulate consumers from price shocks in the future in case foreign producers decide to shut down supplies.
Wallach said when the Uyghur Forced Labor Prevention Act takes effect next month, it could cut dramatically into Chinese solar imports.
“The much bigger thing that’s coming down the pike is that in June the Uyghur Forced Labor Act that Congress passed gets implemented, and much of the actual silicon [for solar panels] comes from these forced labor concentration camps, basically, where the Uyghur people are,” she said. “The importers are in a panic because the way that law works, everything from that part of China is kept out unless you can prove the supply chain is free of forced labor.”