TREND WATCH
In the latest sign of a looming trade war, the U.S. Commerce Department has barred Chinese tech company ZTE from purchasing American parts and software for seven years. This move comes amid escalating tensions between the world’s two biggest economies, with both governments threatening to slap hefty tariffs on each other’s imports. President Trump’s plans to go after China are sparking widespread dismay on Wall Street and Capitol Hill, with officials warning that a trade war would upend the global economy and wreck Republicans’ chances in the midterms. But the public doesn’t agree. In fact, a plurality of Americans support the new tariffs. Opinions on free trade remain hugely mixed, with many backing the president’s desire to secure more favorable terms on trade, but not with the actions proposed to achieve them.
In the past few weeks, the United States and China have announced tit-for-tat tariffs on thousands of products. In March, Trump imposed a 25 percent tariff on aluminum and steel imports and warned of another $60 billion in tariffs coming on other Chinese goods. China quickly retaliated with $50 billion in tariff proposals of its own—and has since followed through with $3 billion of them. In response, Trump has threatened to implement $100 billion in additional tariffs. Though these could remain empty threats, even the prospect of a trade war been enough to send stocks tumbling.
With protectionist policies, the president is moving to fulfill a central campaign promise: to get tough on China and bring back jobs to the working class that helped him to victory. The Trump administration wants the tariffs to address three issues: the trade deficit, intellectual property theft, and China’s “Made in China 2025,” a $300 billion program intended to transform the country into the world’s leading high-tech powerhouse. Officials claim that Trump doesn’t want a trade war, but considers the tariffs leverage to secure better terms and stronger IP protection.
China, in contrast, is looking to establish itself as a formidable world power. In offering some concessions alongside his tariff proposals, President Xi Jinping has taken pains to portray his country as a sober-minded alternative to an uncompromising United States. And it’s no accident that the products covered by China’s tariffs target Trump’s political base. According to a Brookings Institution analysis, they would affect about 2.1 million jobs across 2,783 U.S. counties, 82 percent of which voted for Trump in 2016. China is more dependent on exports than the United States, and thus has more to lose economically. Given the Chinese government’s tight control over the media and the economy, however, Xi doesn’t have to worry about backlash from businesses or consumers. But Trump does. As John Hopkins University professor David Lampton told The New York Times, China is confident it can “outlast a U.S. administration that…has a public with a low threshold for pain.”
Indeed, media coverage of the tariffs has been overwhelmingly negative. After the steel and aluminum tariffs were announced, more than 100 Republican lawmakers signed a letter urging the president not to implement them. Senator Ben Sasse of Nebraska accused Trump of “threatening to light American agriculture on fire.” Headlines abound about small businesses struggling with higher costs and industry giants fretting over barriers to the Chinese market. More than one-third of small-business owners told The Wall Street Journal that tariffs will hurt their businesses; just 5 percent said they would help. What’s more, nearly 80 percent of economists polled by Reuters believe that the measures would hurt or do nothing for the economy.
Yet this outlook isn’t shared by the general public. According to recent polls, the average American is much more likely to side with Trump about the tariffs. Nearly half (48 percent) of respondents in a Morning Consult survey from mid-April said they support the tariffs, while 35 percent oppose them. When asked how they’ll impact the U.S. economy, 43 percent said they’ll hurt, and 39 percent help. Support for the tariffs is strongest among older Americans: Majorities of those age 45 and up back them, compared to 37 percent of 30- to 44-year-olds and 39 percent of 18- to 29-year-olds.
At the same time, a majority of the public also supports free trade. Since 2009, the share of Americans who believe free trade is a good thing for the country has hovered around 50 percent, according to the Pew Research Center. This dipped to a low of 45 percent in 2016, but has since rebounded to 52 percent, suggesting that the wave of protectionist fervor Trump rode into office has cooled somewhat. Surveys from Gallup, NBC/The Wall Street Journal, and Morning Consult reported similar results. Support for free trade declines moving up the age ladder, from 66 percent among those under 30 to 41 percent among those 50 and older.
How can Americans support both free trade and more trade restrictions? The answer may lie in the target of the tariffs. Enthusiasm for free trade wanes when it comes to China. In the latest Morning Consult poll, the share of respondents who label China a threat to the United States (34 percent) edged out those who believe it’s an opportunity (32 percent). Americans’ views of the country are consistently more negative now than they were five years or a decade ago. The sense that China is a rising competitor that doesn’t play fair isn’t just a concern of the GOP; the trade platform Senate Democrats rolled out last August singled out China as a threat to American jobs and whose actions merit the creation of a watchdog council. Over in Europe, leaders in Germany, France, and Italy have also criticized China’s methods.
The road to securing the upper hand, however, isn’t clear. Trump hasn’t specified what better trade policies would look like, leaving observers uncertain about what’s to come. Mark Penn, who co-directs the Harvard Center for American Political Studies/Harris Poll, explained in The Hill: “Time and time again, the public wants the president to accomplish things such as stopping China from taking advantage of the U.S., but is nervous about the tough steps taken to bring [countries like it] to the table.”
The result is a politically uneasy situation. The tariffs essentially pit the Rust Belt against the farm belt: Steel mills and manufacturers that face stiff import competition win, while farmers that export a lot to China lose, leaving rural-area Republicans praying that their constituents’ loyalty to Trump will outweigh their bottom lines. Congressional Democrats, meanwhile, now find themselves in alignment with a president that they clash with on nearly every other issue—at the same time it becomes clear that their turn away from free-trade policies clashes with what many of their youngest supporters want. The threats may ultimately amount to little more than a game of chicken, but the stakes are so high that all those who would be affected are already bracing for the fallout.
TAKEAWAYS
An escalating trade spat between the United States and China has markets on edge. Most experts have slammed Trump’s plans to raise tariffs, but the general public is much more supportive.
- The effects of higher tariffs will be widespread and highly varied. Already squeezed are U.S. companies that heavily consume aluminum and steel, such as automakers (General Motors) and manufacturers (Caterpillar). Most immediately at risk are companies that produce the items subject to China’s new tariffs—a far-ranging list that includes soybeans, tobacco, and aircraft. If the additional tariffs Trump has proposed, which are largely on products used in high-tech fields like robotics and aerospace, become reality, the information technology sector will feel the pain next. Companies that don’t trade much will be unscathed, while companies with a largely domestic customer base and lots of import competition will be cheering.
- Trade policies will loom large in midterm races, especially in the heartland. The same farm states that are top producers of soybeans, beef, and other tariff targets will host many of this fall’s tightest contests for Senate (North Dakota, Missouri, Indiana), House (Kansas, Iowa, Minnesota), and governor (Ohio, Iowa, Minnesota, Michigan). Angry farmers could stick with Trump as easily as they could turn against him; Democrats are hoping for a repeat of 1980, when the farm belt deserted Jimmy Carter following a grain embargo and flocked to Ronald Reagan. Republican lawmakers are also worried that rising consumer prices or floundering stocks could wipe out their biggest overall selling point: the economy.
- Republicans and Democrats have essentially switched positions on trade. For decades, Republicans were considered staunch proponents of free trade and Democrats protectionists. This is no longer the case. One explanation is generational turnover: Many of the Democratic G.I. and Silent leaders were heavily union-oriented. Boomer leaders came of age with the “new left” that converged around cultural issues, making trade more of a wild card. On the Republican side, Trump’s anti-trade, anti-immigration platform reflects support from constituencies that clash with the pro-business establishment. Traditionalists like Paul Ryan are in the awkward position of placating voters more supportive of the president than the party.
