On November 5, the U.S. presidential election will feature a rematch between former President Donald Trump and President Joe Biden as both men have virtually secured their respective party’s nominations for the presidency. With the campaign season now well underway, the candidates have begun presenting major policy proposals on a range of supply chain-relevant issues to win over voters.
The early campaign season has seen both Biden and Trump visit various battleground states, with Biden making stops in Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin in the month following his State of the Union address. Trump’s ability to campaign over the past month has been limited due to the start of his criminal trial in New York on April 15, with the former president only able to hold campaign rallies in Wisconsin and Pennsylvania this past month.
Both candidates have made appealing to union workers from the manufacturing sector a key part of their campaign strategy as blue-collar workers are poised to be key swing voters in the upcoming election. Industrial workers and unions in the U.S. continue to remain concerned about the state of the country’s manufacturing industry which faces ongoing challenges from heightened global competition – most notably with China. Biden and Trump have responded to this concern by proposing a series of policies that are aimed at protecting domestic manufacturers from Chinese and foreign competition.
Biden proposes tariff increase on Chinese steel and aluminum imports
While addressing the United Steelworkers’ union on April 17, Biden presented a new proposal for raising tariffs on Chinese steel and aluminum products. The restrictions are based on claims that China has been hurting local steel and metal makers by dumping subsidized aluminum and steel in the U.S. The tariffs could affect an array of Chinese steel and aluminum products under Section 301 tariffs that currently have a 7.5% or 0% tariff rate. Under Biden’s proposal, the tariff rate on these products would be raised to 25%.
The tariffs will be considered as part of an investigation by the Office of the United States Trade Representative (USTR), which will have the final say on implementation after the organization’s review is complete. The tariff investigation will be conducted alongside an ongoing investigation into China’s shipbuilding industry, which was initiated on April 17 following petitions from five labor unions. The shipbuilding investigation will center on allegations that the Chinese government has engaged in discriminatory and anticompetitive economic actions in the sector. If the USTR investigation supports these allegations, the U.S. could impose a port fee on Chinese-built vessels that dock at U.S. ports, from which the proceeds would support domestic shipbuilding initiatives.
Since current tariffs and duties have already greatly reduced the flow of Chinese steel and aluminum imports, the Biden administration’s new tariffs are not expected to have a severe impact on the availability of these products in the United States. In 2023, only 2% of steel imports and 4% of aluminum imports were from China, with remaining imports consisting of highly processed metal parts like seamless tubes and packaging steels that are unlikely to be covered under the proposed tariffs.
Biden is also attempting to appeal to steelworkers by joining Trump in opposing Japan-based Nippon Steel Corporation’s proposed acquisition of domestic integrated steel producer United States Steel Corporation. However, it is unclear if presidential opposition could hinder the deal in practice. Sources indicate the Committee on Foreign Investment in the U.S. (CFIUS) is unlikely to raise prohibitive concerns about an acquisition by a Japanese company. Although Nippon Steel has promised not to engage in layoffs or facility closures, the planned merger has drawn ire from major labor unions concerned about potential layoffs.
Trump proposes range of anti-free trade measures
Biden’s proposed tariffs and opposition to the takeover of U.S. Steel reflect his campaign’s drive to compete with Trump’s hard line on trade. If elected, Trump has threatened to significantly increase trade restrictions on all imports into the United States by implementing a 10% universal tariff. Trump has indicated that the tariffs could rise as high as 60% for goods from China.
Early analyses by Bloomberg and the Committee for a Responsible Federal Budget think tank indicate that a 60% tariff could lead to an 85% drop in Chinese exports to the United States and would take China’s share of U.S. imports from around 14% in 2023 to nearly 0% by 2030, with manufacturers in the textiles and electronics industries seeing the biggest drop in import share. The measures could also lead to retaliatory tariffs from China and significantly increase domestic prices in the U.S.
While Biden is unlikely to propose trade restrictions on the same scale as Trump, the current President is reportedly considering imposing a ban or additional tariffs on imports of Chinese electric vehicles. Trump has already announced plans for a 100% tariff on all Chinese electric vehicles manufactured in Mexico following news that Chinese automakers are considering building factories in Mexico to circumvent existing U.S. tariffs of 27.5% on Chinese EVs. These measures are designed to avoid the displacement of American vehicle manufacturers by Chinese competitors with cheaper alternatives.
Biden and Trump at odds over environmental regulations
On March 20, the Biden administration announced a new Environmental Protection Agency (EPA) regulation which will require automakers to reduce vehicle tailpipe emissions across their new product lines. The regulation will begin in 2027 and will require a gradual reduction in the maximum emissions generated by vehicles with the goal of having zero-emissions vehicles comprise more than half of all new cars sold in the U.S. by 2032.
The measure was written with significant input from automakers and has been well-received in the automotive industry. However, several oil and gas industry organizations, including the American Petroleum Institute and American Fuel & Petrochemical Manufacturers, have opposed the rule, which could decrease American oil demand by 14 billion gallons (53 billion liters) by 2055.
The Biden’s administration focus on introducing new environmental regulations has drawn criticism from Republicans. Trump reversed numerous Obama-era environmental regulations during his first term as President and has called for the elimination of several environmental initiatives contained in the Inflation Reduction Act such as tax credits for clean-energy and incentives for EVs. The Act was signed by President Biden in August 2022 and proposes measures to reduce U.S. carbon emissions by around 40% by 2030. The EPA is also likely to be significantly downsized under Trump, who is expected to prioritize the development of the non-renewable energy industry over the renewables sector.
Everstream clients are receiving more detailed insights and recommendations about this risk.
Contact us for a personalized demo showing how to get a complete view of the risks affecting your end-to-end supply chain and what you can do to mitigate them.