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How Trump Can Get Our China Trade Policy Back on Track

America’s stock market has been whipsawed by threats of a trade war between the U.S. and China. In the last several weeks alone, investors have seen frequent market swings, signaling a rising risk of unpredictability in an otherwise strong economy.

What’s hitting Wall Street today will impact Main Street tomorrow.

With renewed trade talks between the U.S. and China, as well as public hearings before the Office of the U.S. Trade Representative, set to begin this week, the Trump administration has an opportunity to get things back on track.

The Trump administration is right about the problem, but not the solution. Longstanding concerns about China’s unfair trade practices must be addressed. But the proposed 25% tariffs on $50 billion worth of Chinese imports would impose a multi-billion-dollar tax on our nation’s economy, blunt the positive effects of tax reform, and perversely punish hardworking Americans for Chinese misbehavior.

For hundreds of thousands of workers, the price of a trade war could be their jobs. New research conducted for the National Retail Federation and the Consumer Technology Association shows that the proposed $50 billion in tariffs would lead to four jobs lost for every job gained—a net loss of 134,000 jobs.

That total would rise to 455,000 jobs if the president follows through on his threat of an additional $100 billion in tariffs and China retaliates. Add the projected 470,000 jobs lost because of new steel and aluminum tariffs, and the U.S. could lose nearly 1 million jobs to tariffs under this administration.

Tariffs will also increase prices for American families. Another analysis prepared for the NRF and CTA predicts a TV made in China that costs $250 today would cost $308 after the tariffs—a 23% increase. And if the White House chooses to impose tariffs on an additional $100 billion in Chinese goods, it would be nearly impossible to do so without targeting everyday consumer products such as footwear and apparel.

There’s no way around it: American families will ultimately pay the bill for any tariffs, either through higher prices, lost jobs, or both.

History proves it. In 2011, tariffs on Chinese tires cost Americans $1.1 billion in higher prices and 2,500 jobs. And that was just tires. In 2002, the George W. Bush administration’s steel tariffs led to 200,000 job losses and $4 billion in lost wages. President Richard Nixon’s import surcharge contributed to the stagflation of the 1970s. And the infamous Smoot-Hawley Tariff Act of 1930 unleashed a wave of tariffs against the U.S., which fueled the Great Depression.

Merely the talk of a trade war is already generating uncertainty for U.S. businesses. Consider the implications for American retailers, who operate under extremely complex supply chains and make their sourcing decisions six to nine months in advance. Retailers are now in the final stages of planning what will be on the shelves for the busy holiday season, and the threat of tariffs is inserting a great deal of uncertainty in those plans.

Instead of resorting to tariffs as a cornerstone of its trade policy, the Trump administration should work with Congress, industry, and our like-minded trading partners to develop a comprehensive strategy with clearly defined objectives and binding requirements for China. And let’s not forget that joining the Trans-Pacific Partnership is the best way to counter China’s global ambitions, tear down trade barriers that limit American exports, and increase U.S. influence in Southeast Asia.

The trade war rhetoric has heated up one day and cooled down the next in an unpredictable cycle. But even when things seem calm, we are only one tweet or Chinese threat away from further escalation. If costly uncertainty persists, we could quickly reach the point where there is no turning back.

Anticompetitive Chinese trade practices have persisted for too long, and they should be challenged. But not at the expense of our families, our workers, and our economy.

Matthew Shay is the president and CEO of the National Retail Federation.