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COVID-19, apart from its staggering and rapidly escalating human toll, is spawning an American (as well as global) economic crisis of almost unimaginable proportions. Authoritative U.S. analysts predict that this pandemic will to one degree or another negatively affect up to 80 million jobs, of the country’s roughly 153 million, and deal a potential 30 percent body blow to second-quarter U.S. gross domestic product (GDP).
In the face of such a profound challenge to America’s economic health and prosperity, every tool of public policy needs to be on the table. An obvious one that has not yet received the attention it deserves is tariffs. For the sake of the U.S. economy and the well-being of the American people, the Trump administration should immediately suspend indefinitely all remaining punitive tariffs imposed since it took office, as should those governments that levied retaliatory tariffs on U.S. goods and services.
The Trump administration’s reasoning for imposing these tariffs, disproportionately levied on Chinese imports, is well understood. The administration sought to exert pressure on China in a bid to remedy unfair asymmetries that have, in fact, long existed in the U.S.-China trade relationship. It figured that by making Chinese goods more expensive and therefore less attractive to American importers and consumers, it could force the leadership of China to play more fairly and conduct trade with the United States in ways that were less mercantilist and more mutually beneficial.
Whatever the merits of the administration’s argumentation at the time the tariffs were implemented, a number of empirical data points make clear the degree to which these tariffs, if left in place as the COVID-19 pandemic rapidly spreads, would exacerbate the already enormous strain under which the U.S. economy is now laboring.
Consider these facts, which draw heavily from official U.S. government data publicly disseminated by the Trump administration itself. Under administration policies that have now been in place for three years, the U.S. merchandise trade deficit with China, which hit a record high in 2018, remains at about the same level as in the last year of the Obama administration – and indeed, the average annual U.S. merchandise deficit with China during the first three years of the Trump administration well exceeds that under all previous administrations. The U.S. merchandise trade deficit with the world has likewise swollen to all-time record levels. U.S. manufacturing jobs are being lost, not recovered. The U.S. government, having effectively prevented many farmers from being able to sell their products to China, is now paying those farmers incomes they ordinarily would not need or want with money the government doesn’t have (not a bad working definition of old-school socialism, actually). And American households are paying more today – perhaps as much as $1,500 a year more – than they were a year or two ago for the same basket of consumer goods; indeed, for many American households, such as those comprising single people or led by single parents, the $1,200 checks that the U.S. government is poised to send to many American taxpayers will not fully offset this annually recurring cost even once.
But the economic costs of keeping the tariffs in place at this fraught moment, substantial though they are, pale in comparison to the tariffs’ potential human toll. Newsweek reported last month that economist Chad Brown, of the Peterson Institute of International Economics, has found that the U.S. trade war with China may “cripple the U.S. fight against the COVID-19 pandemic” since the U.S. tariffs levied on Chinese goods “may contribute to shortages and higher costs of vital equipment at a time of nationwide health crisis.” The Council on Foreign Relations’ Jennifer Hillman has come to a similar conclusion. In other words, not only are the existing punitive tariffs costing the United States livelihoods; they may also end up costing the United States lives.
At a time when the United States is already losing millions of jobs and a potentially large percentage of its GDP, to say nothing of at least thousands of American lives, keeping on the books these job-killing and potentially life-threatening tariffs — which simultaneously hurt U.S. shareholders, companies, workers, farmers, ranchers, and consumers (who ultimately pay for them) – is unconscionable and indefensible. Just as the Hippocratic Oath governs the practice of medicine, so, too, should an analogous ethic govern the conduct of national economic policy: the U.S. administration, along with governments across the globe, should do no further harm to the global economy. To state what should be obvious: this is no time for policies that increase the U.S. merchandise trade deficit with China and the world, jeopardize American jobs, inflate the cost of production inputs and household goods alike, and possibly even threaten American lives by making urgently needed equipment and supplies scarcer and more expensive.
Days ago, White House National Economic Council Director Larry Kudlow told Fox News, “We’re trying to do the best we can to cushion the economic consequences of the virus.” Getting rid of any remaining punitive tariffs imposed by this administration – something, as yet, the White House has stated it is unwilling to do – as well as those imposed in response by China and others, should be a major part of that effort. The fight we now face for the health of the U.S. economy and the American people is going to be tough. We will win it more quickly without one hand tariffed behind our back.
David Firestein is the president and CEO of the George H. W. Bush Foundation for U.S.-China Relations and a member of the Board of Directors of the Texas Association of Business. Bob Holden is the chairman and CEO of the U.S. Heartland–China Association and a former Democratic governor of Missouri. Mark Kirk is a former Republican U.S. senator from Illinois; he co-founded and co-chaired the U.S.-China Working Group in the U.S. House of Representatives. Dan Slane, of Ohio, is a former chairman of the U.S.-China Economic and Security Review Commission and a former senior member of the Trump transition team.