Whether Trump or Biden, Either Could Seek to End Tariffs During New Presidency, Businesses Say

Both Joe Biden and Donald Trump could roll back tariffs implemented by the latter during his presidency of the last four years, several people at American businesses in China predicted, as results of the latest election continued to come in without a clear winner on Wednesday in Shanghai.

At the same time, people also predicted a new Biden administration could quickly bring America back to talks for a Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a sweeping trade bloc centered on Pacific Rim countries, which was favored by previous President Barack Obama but famously trashed by Trump shortly after becoming president four years ago.

Most agreed that regardless of who wins the presidency, it will be difficult to go back to the past U.S.-China relationship when China was still rising but clearly lagged behind the U.S. Nearly half of American businesses expect U.S.-China trade tensions to last indefinitely or at least for the next three to five years, up sharply from about 30% who felt that way in 2019, according to a survey published in September by the American Chamber of Commerce in Shanghai.

But while Biden might also continue Trump’s broader efforts at rebalancing the relationship, they predicted his approach would be more traditional and diplomatic than Trump’s more high-profile, confrontational style.

Late Wednesday afternoon in China, the race was still too close to call, with neither Trump nor Biden having the 270 Electoral College votes needed to declare victory. Much of the national map voted similarly to patterns in 2016, though key states including Pennsylvania, Michigan and North Carolina were still up for grabs.

“With both sides, it’s in the realm of possibility that they would roll back tariffs,” said Veli-Antti Ruismaki, a project director at the American-owned China Sage Consultants, which specializes in helping a mostly American clientele sell precision components to China. “It would be more likely with Biden. But Trump could also decide there’s been enough arm-twisting and do a deal.”

“If Biden does it, it’s more like he would be saying ‘Let’s not be so rash.’ For Trump, it would be more like he was getting concessions,” he said in an interview at a Wednesday morning American Chamber of Commerce in Shanghai to watch election results.

People interviewed by Caixin said they or their clients were still feeling the pinch of tariffs that were rolled out by Trump over the last two years. Last June when the trade war was still in full swing, more than 500 companies including the retailers Walmart Inc., Target Corp. and Macy’s Inc. signed a joint letter to Trump warning that additional tariffs on China would hurt American businesses and households.

Ruismaki said that one of China Sage’s biggest clients had been hit with 25% tariffs for its imports to China, and that combined with lengthy inspections at the height of tensions ultimately cost the company a major customer. But the lengthy inspections are now past, and the client has managed to offset the lost account with other new buyers.

On the other side of the trade equation, one American company feeling the pinch has been Golden Pacific Fashion and Design Co. Ltd., whose exported curtains from China to the U.S. initially got hit with an additional 15% punitive tariff on top of the exiting 11.3% tariff. That punitive tariff was later reduced to 7.5% as the two sides worked out their phase one trade deal.

The company’s founder and President Michael Crotty said a second Trump term would be a “disaster” for bilateral relations, but also acknowledged that it would be difficulty for a Biden presidency to return to the previous relationship.

“Deep down I think Biden realizes the two countries need to get along,” Crotty said. “They can be strategic competitors or strategic partners. I prefer strategic partners. With Trump you have a very adversarial relationship,” he added.

Most businessmen interviewed by Caixin also said a Biden presidency would be welcome due to its more predictable nature — an important factor for businesses. “There would probably be less volatility and more predictability in the U.S. China relationship under Biden. For Trump, the relationship would remain volatile,” said a country manager at a major U.S. corporation selling into China, speaking on condition his name not be used.

While people agreed that a tariff rollback by either new president was possible, albeit in different ways, one area where the two men would differ markedly is in their approach to foreign trade blocs. Whereas Trump has been hostile on the subject of more open trade, including hostility to the World Trade Organization, Biden and his Democratic party in general have been more receptive.

Accordingly, Crotty predicted a Biden presidency would be quick to revive the CPTPP, which was regarded as an economic pillar of former U.S. President Barack Obama’s strategy of pivoting to Asia and countering China’s growing influence in the region. “My fundamental hope is that Biden will return to the CPTPP,” Crotty said.

Contact reporter Yang Ge (geyang@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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