U.S. trade ties with China will remain tense no matter who wins the election in November, according to Carlos Casanova, senior economist at Swiss private bank UBP.
Casanova’s view is shared by other experts who have said that both the Republican and the Democratic presidential nominees — Donald Trump and Kamala Harris — will remain tough on China.
Trump has proposed up to 100% tariffs on Chinese goods and a blanket tariff of 10%-20% on all other imports, while Harris is expected to largely stick with Biden’s tariff policy, experts told CNBC.
“A Trump victory is highly likely to increase trade and economic hostilities between the U.S. and China, ramping up the trade and financial decoupling between the two countries,” said Eswar Prasad, an economics professor at Cornell University.
Stronger tariffs by Harris cannot be ruled out either, given Biden not only retained Trump’s tariffs, he piled on more. The U.S. in May announced stiff duties on about $18 billion worth of Chinese imports, including electric vehicles, solar cells, lithium batteries, steel and aluminum.
During the debate, Harris did not give specifics on her China policy, but said that “a policy about China should be in making sure the United States of America wins the competition for the 21st century.”
“Which means focusing on the details of what that requires, focusing on relationships with our allies, focusing on investing in American based technology so that we win the race on A.I. and quantum computing,” Harris added.
“We think that ongoing trade tensions, both with U.S. and Europe, are here to stay. I think in the U.S. it’s well understood, the support for more stern actions against China is bipartisan. So it doesn’t matter who wins the election,” Casanova told CNBC’s “Squawk Box Asia.”
The U.S. has warned about Chinese overcapacity issues, with Treasury Secretary Janet Yellen reportedly saying in May that China’s excess industrial capacity threatened both American and European firms, as well as the industrial development of emerging market countries.
In April, Yellen met with Chinese officials to discuss the overcapacity issue and market-oriented reforms, saying in prepared remarks that “A healthy economic relationship must provide a level playing field for firms and workers in both countries.”
Beijing has been charged with dumping goods as domestic demand cools down, inviting heavy duties on Chinese exports from several countries, besides facing charges of heavily subsidizing industries such as EVs that has drawn tariffs from U.S. as well as European countries.
Speaking after the debate, Marko Papic, chief strategist of BCA Research said that “I don’t think we really got clarity on anything” after the debate, adding that “it does appear that the market was surprised by her [Harris’] performance at least a little bit. But again, it’s not sufficient to force us as investors to start pricing in a dramatic political shift.”
—CNBC’s Dylan Butts contributed to this report.