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I’m Isaac Saul, and this is Tangle: an independent, nonpartisan, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”
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Tomorrow.
A quick heads up: It has been a long few weeks of intense news. Tomorrow’s newsletter is going to be something very different from our normal Tangle newsletters — something that has nothing to do with politics. I’m looking forward to seeing how people respond to it, and I hope it serves as a palate cleanser from the last few weeks.
Quick hits.
- The Supreme Court rejected a challenge on Thursday to the way the Consumer Financial Protection Bureau is funded, one that could have hobbled the agency and cast doubt on its regulations and enforcement actions. (The decision)
- President Biden and former President Trump agreed to hold their first debate on June 27 on CNN. The second debate will be hosted by ABC on September 10. Robert F. Kennedy Jr. will be excluded from the debates because of a requirement that participants must be polling above 15% nationally and appear on ballots in states with at least 270 combined electoral votes. (The details)
- The Supreme Court allowed a new Louisiana congressional map that will add a second majority-black district for the 2024 election. (The ruling)
- Approximately 107,000 people died of drug-related overdoses in the U.S. last year, according to new CDC data. The number is a 3% decline from 2022, the first drop in year-over-year overdoses since 2018. (The data)
- President Biden asserted executive privilege over the audio of his two-day interview with the special counsel investigating his handling of classified documents. (The recordings)
Today's topic.
Biden's China tariffs. On Tuesday, President Biden announced major new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment, covering $18 billion worth of Chinese imports. The largest tariffs are on imports of electric vehicles, quadrupling the proportion of the tax from 25% to 100%.
Reminder: Tariffs are a way governments influence trade by imposing a tax on the goods imported from another country, raising revenues on those goods or protecting competitive advantages over those countries.
In this case, Biden is raising tariffs because he believes China's government subsidies have ensured their companies — like electric car manufacturers — can operate with competitive advantages in the U.S. market. For example, the price of a small EV from the Chinese company BYD starts at around $10,000, which is roughly one-third of the price of the Nissan Leaf, the next-cheapest electric car being sold in the U.S.
“American workers can outwork and outcompete anyone as long as the competition is fair,” Biden said. “But for too long, it hasn’t been fair. For years, the Chinese government has poured state money into Chinese companies ... it’s not competition, it’s cheating.”
Biden's decision is largely similar to policies from President Donald Trump, who emphasized competition with China and regularly slapped tariffs on Chinese imports in an effort to protect American manufacturing. However, Biden criticized Trump in his remarks, accusing the former president of failing to crack down on China's trade abuses when he was in office. Trump's campaign responded by saying the tariffs were a "weak and futile attempt" to distract from Biden's own subsidies for electric vehicles, which they claimed will be insufficient to prevent layoffs at auto factories. At a campaign rally on Saturday, Trump said that as president he would put a 200% tariff on Chinese cars assembled in Mexico, as well as a 60% tariff on all Chinese goods.
Some automotive and trade experts have said the tariffs will only delay China's entry into the U.S. EV market, not prevent it. “They’re going to be here. It’s inevitable. It’s just a matter of time,” Dan Hearsch, managing director of automotive and industrial practice at consulting firm AlixPartners, told MSNBC. “Western automakers, Western suppliers really ought to be upping their game and preparing to take this on or play with them. It’s one or the other.”
China, meanwhile, warned that the tariffs could negatively impact bilateral cooperation between the two nations.
Most of the tariffs will be phased in over the next three years, and some won't take effect until 2026, in an attempt to avoid any immediate inflationary impacts.
Today, we're going to break down some arguments from the right and left about the tariffs, then my take.
What the right is saying.
- The right opposes the tariffs, suggesting they’re little more than a political gambit.
- Some criticize the protectionist motivations behind the move.
- Others say the tariffs aren’t targeting the right Chinese imports.
National Review’s editors called the tariffs “nonsensical.”
The tariffs are “the latest example of two trends in the Biden administration: talking tough on China but not following it up with meaningful policy, and bending over backward to appease organized labor,” the editors wrote. “The White House says the tariffs will cover $18 billion worth of goods combined. That’s not nothing, but for perspective, $18 billion is equal to 4 percent of total U.S. imports of goods from China last year. Biden’s claims to be protecting American workers and businesses in general with such actions are hard to take seriously.”
“The claim that these tariffs are somehow striking a major blow to a strategic adversary is laughable,” the editors added. “These tariffs at least make a little more sense when you understand them as political favors to labor unions… Biden is clear that his radical environmental policies, including pushing electric vehicles on a scale that the public does not desire, are all part of his plans to boost organized labor, constantly touting the ‘union jobs’ that his environmental schemes will create. He no doubt thinks union voters will be important to his efforts to win swing states such as Michigan and Pennsylvania in the upcoming election.”
For The Cato Institute, Clark Packard said the tariffs “put politics over good policy.”
“With the Trump campaign promising a 60 percent tariff on all imports from China, the Biden administration apparently feels compelled to respond with its own tariffs… It’s truly a race to the protectionist bottom,” Packard wrote. “Today, by many accounts, China is producing some pretty good quality EVs at prices well below those for most EVs in the US market (even with generous IRA subsidies). Effectively banning Chinese EVs will thus give remaining automakers in the United States room to keep EV prices higher than they’d otherwise be, to American consumers’ detriment.”
“The tariffs will thus eliminate potentially important competitive pressures on US automakers, which—other than Tesla—are largely laggards in the EV market,” Packard said. “Furthermore, by raising the price—and thereby stunting the deployment—of EVs, the tariffs undermine the Biden administration’s stated goals of reducing carbon emissions… continu[ing] the administration’s habit of choosing politics and protectionism over their environmental agenda.”
In Townhall, Terry Jeffrey argued the tariffs don’t go far enough.
“During the Biden era, this country has run a trade deficit with China that exceeds $1 trillion. This week, the Biden White House tried to present the president as a trade hawk who is going to fix this problem,” Jeffrey wrote. “Do any of the Chinese products Biden is preparing to hit with increased tariffs rank among the top U.S. imports from that country? No. The top U.S. import from China in 2023… was ‘cell phones and other household goods.’”
“What about electric vehicles? ‘Trucks, buses, and special purpose vehicles’ ranked 57th among U.S. imports from China,” Jeffrey said. “After the United States has imported more than $1.5 trillion in goods from this genocide-committing regime during Biden's time in office, Biden is imposing targeted tariffs that the White House says will impact only $18 billion (or about 4.2%) of imports from China. If Biden were serious, he would impose increased tariffs on 100% of imports from China.”
What the left is saying.
- The left is mixed on the move, though many worry it amounts to an unearned handout to U.S. automakers.
- Some say the tariffs are needed to give the EV industry a chance to compete with China.
- Others say U.S. consumers will bear the brunt of the tariffs.
In The New York Times, Gernot Wagner and Conor Walsh wrote “don’t slam the door on inexpensive Chinese electric vehicles.”
“These new tariffs on electric vehicles are little more than a handout to legacy car companies like General Motors and Ford. Middle-class Americans should have access to these cars, and because of these tariffs, they will remain a luxury, available mainly to the rich,” Wagner and Walsh said. “Low-cost Chinese models that lower- and middle-income Americans could afford — like BYD’s Seagull, which runs for less than $10,000 — aren’t currently sold here largely because of tariffs over 25 percent. The new tariffs of 100 percent will make it even harder for these cars to compete in the U.S. market.”
“It is clear that American car manufacturers need to catch up to the competition, and fast. The problem with using tariffs to protect them from competition is that the companies then have less incentive to invest in new technologies. Chinese companies will continue making huge strides, selling their cars abroad while cutting off opportunities for American companies to export their own products to foreign markets,” Wagner and Walsh wrote. The Biden administration “ought to be taxing China for its soaring carbon emissions, not for its electric vehicles and solar panels.”
In The American Prospect, David Dayen argued “tariffs give U.S. automakers a fleeting chance.”
“U.S. automakers have lobbied for protection from Chinese competition and relaxation of federal requirements to transition to EVs. They got both, but neither relieves the pressure to move toward cleaner engines. In the 1980s, the government created breathing room for the Big Three automakers to fight off competition with Japan; they spent the time engaging in joint ventures, becoming more efficient companies, and making better cars. With even more pressure from within now, that exact spirit must animate the industry, or the government won’t be able to stop them from failing.”
“The economic fallout of sacrificing an industry of the future would be lasting, as the experience of domestic solar manufacturing makes clear. And the political fallout of allowing a failure that is orders of magnitude beyond Solyndra in the heart of the Midwest’s blue wall would be catastrophic,” Dayen said. “The total value of Chinese imports coming under tariffs is $18 billion, a fly speck in the overall scheme of global trade. This is largely about protecting an investment in the domestic auto industry.”
In The Financial Times, Edward Luce said “America is pulling up the drawbridge.”
“At this rate of bidding, US-China decoupling will be set in bipartisan stone by November. The choice will be between Biden sealing an orderly divorce, or Trump doing it in chaotic leaps and bounds,” Luce wrote. “Either way, America’s direction of travel is ominous. At one speed or another, Republicans and Democrats alike are now in favour of pulling up the global drawbridge. Biden’s economic and climate change arguments both fail on their own merits.”
“As Biden knew in 2019 but appears to have forgotten, the costs of tariffs are borne by consumers not by importers. Biden’s main targets are Chinese solar panels, batteries and EVs. These are capital intensive goods. Manufacturing employment is declining across the world, including China itself. For the symbolic gain of a handful of muscular jobs, Biden is imposing a broad tax on the middle class and undermining US competitiveness,” Luce said. “Then there is the hit to his climate change policy… The Biden effect will be to raise the US domestic price of EVs, solar panels and other green inputs and delay America’s energy transition.”
My take.
Reminder: "My take" is a section where I give myself space to share my own personal opinion. If you have feedback, criticism, or compliments, don't unsubscribe. Write in by replying to this email, or leave a comment.
- China already expects other markets to protect against the subsidized goods, and it’s over-extended themselves on EVs.
- The obvious political motivations at play are also impossible to ignore.
- I get that some protectionism for our electric-vehicle and clean-energy markets is needed, but I wonder if this will do more to hurt the American consumer.
Tariff imposition is a policy question that I really struggle with, in part because I both want to see the U.S. manufacturing industry win and because, as a consumer, I want cheaper, high-quality products.
Chinese companies have undeniable institutional advantages over U.S. companies in labor-intensive production of large goods like electric cars, and I don’t think it’s a given that we should just let them have that advantage. It would be one thing if Chinese companies had found innovative ways to produce cars more cheaply or if they were selling them only in the Chinese market. But in reality, their advantage is born out of heavily subsidized production reliant on incredibly cheap labor, so much so that there is little chance anyone in the global market can compete.
China knows what it's doing, and it knows how the world is going to react. Undercutting the market with artificially deflated prices is part of China's economic policy, and it expects other markets, like the U.S. and European Union, to counter them to protect their own workers. But China also put itself in a jam. The country has invested so heavily in its own auto industry that it now produces far more cars than even its 1.4 billion-person country wants — so the only way the Chinese government can benefit from its massive investment now is to dominate the global market. So I understand the impulse to want to balance the scales and give U.S. automakers a chance to compete on EVs.
At the same time, all my political instincts are to support free markets, free trade, and free enterprise. I'm an American consumer who would love the option to buy a brand new $10,000 car, and at a very basic level I don’t want my government preventing me from doing that. Yes, I want to protect American auto workers and manufacturing jobs. But if every American who wants an electric car could save $20,000 buying one, wouldn't that help the economy in other sectors? Why are we picking American automakers to protect and not addressing, say, the 25% of U.S. apparel that comes from China? Why are we fully ceding the manufacture of personal tech devices? And China isn’t the only country tampering with their auto industry; the Biden administration is subsidizing our electric vehicle industry, too — why is that fine here but not there?
As Cato writer Clark Packard pointed out (under “What the right is saying”), we already had a 27.5% tariff on Chinese-made EVs, and China's current share of the U.S. electric vehicle markets sits at just 1%. As with steel, Biden isn't just trying to limit Chinese products from the market — he is effectively prohibiting them from entering. When you consider those proportions and effects, these tariffs seem a lot like a political play — one designed to boost Biden's image with unions and automakers in 2024 — not one actually devised to generate a needed economic or geopolitical impact.
The political motivations are clear as day. Biden needs Michigan to win the 2024 election, and he can't just let the auto industry get fed to the wolves. If you’re a voter who cares about long-term investment in clean energy, then perhaps a short-term cost of more expensive EVs and solar energy is worth the long-term benefit of getting Biden a second term. That seems like the calculation Biden is hoping many swing-state voters will make.
But those are just the political effects; the economic ones are even more complex. To illustrate just how complicated this issue is, consider the fact that both supporters and critics of these tariffs cite the same historical event to justify their position: The tariffs Reagan used in the 1980s to counter Japan’s ascendency in the U.S. auto market.
Packard, who opposes these tariffs, wrote this:
Research shows that those restrictions raised the price of Japanese automobiles in the United States by an average of about $3,700 (in 2022 dollars). But by restricting lower‐priced suppliers’ access to the US market, the import restrictions also allowed domestic automakers to raise prices by an estimated $2,138–$2,850 per car (2022 dollars). And European automakers raised their US prices even more. Overall, the restrictions on Japanese cars cost American consumers more than $16 billion (2022 dollars) per year throughout much of the 1980s.
Meanwhile, David Dayen (for The American Prospect under “What the left is saying”), who supports the tariffs, wrote this:
In the 1980s, the government created breathing room for the Big Three automakers to fight off competition with Japan; they spent the time engaging in joint ventures, becoming more efficient companies, and making better cars. With even more pressure from within now, that exact spirit must animate the industry, or the government won’t be able to stop them from failing.
Same policy, two different arguments about the impact it had.
I’m not fully convinced by that argument, but I do think Dayen makes the best case for supporting the tariffs. His argument acknowledges that protectionism isn't always good, but he emphasizes that this move isn't protectionism for the sake of keeping some dying industry on life support — it's for the sake of protecting a massive investment that our economy has made in electric vehicles and clean energy. The EV tariffs are protectionism to help build a burgeoning industry right here in the U.S. that could create thousands of jobs and also ensure our auto industry isn't reliant on a global adversary like China, and the tariffs on solar cells and steel production would protect our nascent clean energy industry.
To be frank, I’m not entirely sure where I land here. I understand the rationale behind these tariffs, and Biden may not have had much choice considering how far he has already gone to invest in a domestic EV and clean energy industry. But I just can’t overcome my general position, that tariffs are almost always bad for American consumers in the long term or my concern about an all-out trade war — one where China begins punishing us in other spaces with tariffs of its own. This could spin out quickly, especially since both Biden and Trump — and Democrats and Republicans — seem hellbent on going this route.
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Your questions, answered.
Q: How does Tangle estimate reading time on your emails? I'm a teacher and an avid reader, but I almost NEVER get through your emails in the time estimated. Maybe it's because I try to read actively, click on relevant hyperlinks, engage in the polls and questions, etc. But back to the question: are the estimated times based on the quickest, surface-level read through, and if so, does that implicitly encourage readers not to dig deeper and engage more with the content?
— Brian from Chicago, IL
Tangle: It’s based on a couple of factors, but primarily it’s a function of word count. I’ve typically used this website to estimate read time, which calculates it based on a speed of 300 words per minute (wpm).
Other places suggest the average reading speed for an educated adult is somewhere between 200 and 300 words per minute. I could take the average speed of 250 words per minute — or the suggestion of 238 for non-fiction writing — and assume that everybody is reading the whole newsletter very thoroughly. But based on the results of reader surveys, I know that people tend to skim through some sections of the newsletter (or skip them entirely), so that’s why I settled on using the more aggressive 300 wpm to calculate reading time.
Since we keep our standard length at 4,000 words, that means I calculate our average newsletter at about a 13-minute read. Then, based on whether we’re going a little under or a little over, I’ll ballpark it by adding or subtracting a minute or two. So the process is based on something, but in the end it’s not very scientific.
I definitely want everybody to read what I write, so there’s a good argument that I should assume a slower read rate. However, that’s balanced out by the fact that many people don’t want to read an article all the way to the end; and if I introduce an article with a longer estimated read time, that will turn many people off from reading it at all.
If I assumed a read rate of 200 wpm, our standard read time would be 20 minutes. I’m sure for many of you that’s the minimum amount of time you spend reading Tangle, because you go through it thoroughly and take the time to follow some of our sources as you do. But for readers who don’t have a lot of time — the ones who are most likely to skim, and also the most likely to decide whether or not to read based on the time estimates — I think it’s not only preferable to use the faster wpm, but probably more accurate, too.
I hope that all sounds honest and fair.
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Under the radar.
Seven weeks after the Dali cargo ship crashed into Baltimore's Francis Scott Key Bridge Bridge, nearly two dozen sailors from its crew remain trapped inside. On Monday, the sailors braced as a controlled demolition took down remaining parts of the Francis Scott Key Bridge, the first step toward freeing the crew members. But their situation won’t be fully resolved once they are able to leave the boat. The crew includes 20 Indians and a Sri Lankan national who can't disembark in part because of visa restrictions, a lack of required shore passes, and an investigation by the FBI and National Transportation Safety Board. BBC has the story.
Numbers.
- -$60.8 billion. The U.S.’s trade deficit with China in Q1 2024, according to U.S. census data.
- $28 billion. The approximate amount spent by the Chinese government on EV subsidies and tax breaks between 2009 and 2022.
- 6 million. The approximate number of EVs sold in China in 2022, roughly half of all sales globally that year.
- 8.6 million. The approximate number of EV charging outlets in China.
- 168,300 The approximate number of EV charging outlets in the U.S.
- 8.5%. The percentage of new auto registrations in the U.S. that were EVs in 2023.
- 38%. The percentage of Americans who say they are very or somewhat likely to consider an EV for their next vehicle purchase, according to a 2023 Pew survey.
The extras.
A note: In yesterday’s survey results, we erroneously described the most popular response as 44% of respondents saying they were not at all concerned about bird flu in cattle. The description should have said that 44% were a little concerned.
- One year ago today we covered the Daniel Penny charges.
- The most clicked link in yesterday’s newsletter was the end to the Harvard protest.
- Nothing to do with politics: What location is in the background of the Mona Lisa?
- Yesterday’s survey: 1,110 readers answered our survey on Donald Trump’s “hush money” trial with 30% saying they think a guilty verdict is somewhat unlikely. “As sordid as this whole thing is, I'm not sure using his own money (not campaign funds) to pay Daniels off is a crime. A very tenuous legal theory,” one respondent said.
Have a nice day.
Researchers from The University of Manchester are developing a system that could significantly advance medical treatment and smart materials. The novel technique uses a type of interlocked molecule called rotaxane to trigger the release of functional molecules under the influence of mechanical force. The technique could be used to release medication at the site of a tumor or develop materials that can repair themselves when damaged. “Although this is only a proof-of-concept design, we believe that our rotaxane-based approach holds immense potential with far reaching applications — we're on the brink of some truly remarkable advancements in healthcare and technology,” Guillaume De Bo, Professor of Organic Chemistry at The University of Manchester, said. Science Daily has the story.
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