By Jason McMann
May 12, 2022 at 11:00 am ET
The Biden administration is considering scaling back tariffs on China to lower inflation.
Due to a sharp reversal in Democratic sentiment, doing so is unlikely to curry favor among any segment of the electorate: As of early May, a plurality of Democrats no longer support reducing tariffs on China to combat elevated prices.
Inflation expectations and China’s decision to maintain close ties with Russia following its invasion of Ukraine offer two possible explanations.
The shift in views leaves few viable options on the table for companies seeking to overturn the tariffs, and those that remain are likely to be short-lived.
In a sharp reversal of sentiment, a plurality of Democrats no longer support reducing tariffs on China to combat elevated prices.
Democrats now find themselves aligned with the plurality of Republicans who prefer to keep the tariffs in place, even if doing so means prices will stay high.
Democrats’ pivot comes amid the Biden administration’s mounting efforts to combat inflation ahead of the 2022 midterm elections. Scaling back the existing tariffs on China is one policy option the administration is considering, in line with a widely cited estimate that doing so could reduce consumer price index (CPI) inflation by 1.3 percentage points. If the Biden administration proceeds down this path, the decision likely won’t play in its favor among any segment of the electorate.
China’s decision to maintain close ties with Russia after it invaded Ukraine is one likely driver of the shift in sentiment. Since the invasion, a majority of Democrats (and a large share of Republicans) have expressed support for sanctioning Russia even if doing so would cause prices to rise. Democrats’ newfound enthusiasm for keeping tariffs on China in place may simply be an extension of these dynamics.
Inflation expectations are another possibility. As inflation continues to run hot, some U.S. adults may find the tariffs’ knock-on effects to be more inconvenient than unbearable. The implication is that expectations of inflation remaining elevated for the foreseeable future could have made continuing to punish China with tariffs more palatable, despite their impact on prices.
Both explanations could also explain the parallel rise in support for tariffs observed among Republicans and independents.
In November 2021, we argued that Biden’s all-time low approval ratings, coupled with historically elevation inflation, would make his administration more attentive to price sensitivities among Democratic voters in the run-up to the midterms. Accordingly, we advised companies seeking to overturn the tariffs to emphasize Democrats’ support for rolling them back as a means of reducing inflation.
With that support now evaporated — and with a plurality of U.S. adults (including Democrats and Republicans) saying they believe that existing tariffs on China benefit the overall economy — companies’ best bet is to emphasize the ongoing hit to their bottom line: As of May 2022, 35% of U.S. adults (and 32% of Democrats) said they bought fewer goods over the past month because of the tariffs.
But even that strategy is unlikely to hold water for long. The share has declined by 7 percentage points since February. Among Democrats, the fall has been even more precipitous at 15 percentage points.
As a result of these dynamics, few viable options remain on the table for companies seeking to overturn U.S. tariffs on China. By contrast, American companies that benefit from them will be able to plead their case far more easily in the months ahead if prevailing trends in Democratic sentiment hold.
Jason McMann is Head of Geopolitical Risk Analysis for Morning Consult. He leverages the company's high-frequency survey intelligence to advise clients on how to integrate geopolitical risk into their decision-making.