Wouldn't you want to know if a new federal policy cost you $1,700?
And some Iowa and Quad-City Democrats bail on Biden
Regular readers of this newsletter know I’ve been pushing for greater attention to be paid to the trade plans that have been put out by Donald Trump and Joe Biden.
The reason is simple: Trade supports a lot of jobs in Iowa, and both Biden and Trump back protectionist policies that will have a significant and long-term impact on the state’s economy.
In addition, with Americans more likely to cite the cost of living as the issue that most concerns them, it seems like a no-brainer that these trade plans—Trump’s, in particular—should get more attention. Economists have warned that Trump’s plan will dramatically raise costs for Americans.
I raise the issue again today because there is new reporting that puts the debate into pretty good context.
First, the Wall Street Journal reported this late Thursday:
Most economists believe inflation, deficits and interest rates would be higher during a second Trump administration than if Biden remains in the White House, according to a quarterly survey of forecasters by The Wall Street Journal.
The article cited Trump’s plans for significantly increased tariffs.
Trump has proposed a 10% universal tariff on all imported goods and said he wants at least a 60% tariff on all Chinese imports. Biden, meanwhile, has largely kept in place the more modest tariffs that Trump implemented while he was president. Biden also quadrupled tariffs on electric vehicles from China, from 25% to 100%. The Biden administration is trying to protect a still-underdeveloped EV industry in the United States.
Both the Biden and Trump approaches stray from the mostly free trade thinking that has guided American presidents going back several decades. But Trump’s plans are the more radical. Here’s more from the Journal article:
“I think there is a real risk that inflation will reaccelerate under a Trump presidency,” said Bernard Baumohl, chief global economist at the Economic Outlook Group.
The article said that of the 50 forecasters who answered questions about Trump and Biden, 56% said inflation would be higher under Trump than Biden, while 16% said the opposite. The rest of saw no real difference.
In May, the Peterson Institute for International Economics said the Trump tariff plan would cost the typical middle-income household $1,700 per year.
There also is a new Axios story that does a pretty good job putting Trump’s plan into perspective.
In the 2000s, a so-called China shock swept through the U.S. economy, lowering consumer prices while causing massive losses of manufacturing jobs. Former President Trump's proposed tariff regime would be, in effect, an audacious attempt to reverse it.
Axios adds:
To those with Trump's ear on trade policy, the risk of higher consumer prices or lower profits is a small price to pay for supporting domestic manufacturing — and an economic cleavage with a rival world superpower is nothing to be feared.
Will it work? Would it undo the “China shock?”
An official from the Peterson Institute is quoted saying that, clearly, the answer is “no.” That supply chains in China will simply move to other countries, but not to the US.
So, what about the presumption that the higher tariffs will be passed on to American consumers in the form of markedly higher costs, which TrumpWorld disputes?
Most economists say the answer to that question is, yes, it would cost Americans more. Another estimate put the damage at $1,500. Still, there are some dissenting voices.
A Wall Street Journal article a couple months ago cited a 2019 study that looked at how the Trump-era tariffs affected the behavior of retailers. The Journal reported:
They found only a small increase in prices on goods subject to tariffs, suggesting that retailers absorbed much of the cost. Absorption by retailers and wholesalers would mean that the tariffs function as a tax on businesses.
The Tax Foundation also has weighed in on the cost of the tariffs imposed during the Trump administration and extended by Biden. The organization said that, before accounting for behavioral effects, the higher tariffs amount to an average annual tax increase of $625 per year on US households.
As I’ve said previously, I haven’t seen much, if any, comment about Trump’s trade plans from Iowa’s all-GOP congressional delegation, even as they have complained about the Biden administration trade policies. But the Iowa Agribusiness Radio Network reported on Thursday that this week “Grassley (said) that the Trump campaign and the GOP platform that calls for a tariff-led trade policy is not friendly to ag trade.”
“I think it’s going to be very unhelpful,” the senator said in an audio clip posted to the network’s website.
In 2018, the Chinese reacted to Trump’s trade war by retaliating against agriculture, which hit the soybean market especially hard.
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Will he stay or will he go?
Democrats are still debating whether President Biden should continue to be their party’s presidential nominee. Meanwhile, Democrats who are seeking to represent people in the Quad-Cities—on both sides of the Mississippi River—in the US House have made up their minds.
They say they want Biden to step aside.
Christina Bohannan, the Democrat who is running against Republican Rep. Mariannette Miller-Meeks in Iowa’s First District, said Thursday that people have been sharing their “grave concerns” about Biden’s ability to run a strong campaign.
“I owe it to them to speak my mind. It is time for President Biden to withdraw from this campaign and pass the torch to a new generation of leadership,” she said.
In the Illinois Quad-Cities, Rep. Eric Sorensen added his voice to the list of Democrats in the US House who are calling on Biden to quit the campaign.
Sorensen called Biden a good man, but said, “it is more important than ever that our neighbors have a candidate for President who will communicate a positive vision for every person in this country. Someone who can demonstrate the strength and wisdom needed to lead us through the worst storms. A leader who will stand up to the present threats against democracy.”
Contempt measure fails
US House Republicans voted to hold Attorney General Merrick Garland in “inherent contempt” for refusing to turn over the audio tapes of the interview the Justice Department’s special counsel, Robert Hur, conducted with Biden over his handling of classified documents. The measure called for fining Garland $10,000 for each day of delay.
The Iowa Capital Dispatch has a good story on the vote here.
The House turned down the proposal, 204-210. All 206 Democrats voted against it, along with four Republicans. Two-hundred and four Republicans voted for the measure. Of the four members of the Iowa delegation, three voted to hold Garland in contempt.
One member of the delegation, Rep. Mariannette Miller-Meeks, did not vote.
(For those wondering, “inherent contempt” is a seldom used tool that Congress maintains to seek compliance with its demands. It is more accurately described as an “implied” constitutional power, according to the Congressional Research Service.)
Our podcast
If you haven’t had a chance, give a listen to the Iowa Writers’ Collaborative’s new politics podcast.
We taped on Wednesday, and it was posted early Thursday morning. Topics included: Whether President Biden should step aside or not; the potential impact on down ballot races; the upcoming Republican National Convention; Iowa’s recent abortion ruling from the state Supreme Court and the prospects of Gov. Kim Reynolds seeking another term.
Thanks for reading, and as always, thanks for your support.
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