By Victor Alonso 
Photo Credit: Chip Somodevilla/Getty Images; Jeff Kowalsky/AFP via Getty Images
Presidential nominees Former President Donald Trump and Vice President Kamala Harris are engaged in what both candidates have described as an existential battle for the future of the United States and its democracy. With polls showing the candidates in a tight race across the board, both have attempted to set themselves apart in the eyes of Americans, particularly with their views about how to best improve the economy. Tariffs have become an increasingly prominent issue every election cycle due to increasing deindustrialization and offshoring. Offshoring is a business practice in which a company moves some or all of its operations overseas, usually to countries with low labor costs. Such issues are especially prominent in the Midwest. As Americans focus on economic growth, both candidates have attempted to outflank their opponents and gain the public’s favor on the issue.
A tariff is a tax placed on foreign goods in an attempt to artificially inflate their prices in comparison to domestic goods to stimulate the domestic economy. Going back to the 1800s, tariffs have been the favorite tool of protectionists, who advocate shielding domestic markets using tariffs to protect local manufacturing. The United States’ relationship with China has been the main focus of both candidate’s tariff rhetoric on the economy. Both Harris and Trump have attempted to portray themselves as tough on China in their economic policy.
Trump’s Plan
Trump has advanced his former policies by advocating for a ten to twenty percent universal tariff on imports. Trump’s plan could also include a tariff rate as high as sixty percent on all Chinese goods. The sixty percent rate would be an increase not seen since the Smoot-Hawley Tariff Act in 1930, which hiked rates by 20% and contributed to the Great Depression by reducing imports. Trump says his tariff plan will bring back jobs, reduce inflation, and generate revenue for the government. Coupled with a multitude of proposed tax cuts in the same vein as his 2017 one, Trump paints his plans as the precursor to a “manufacturing renaissance”. However, Trump has also kept from delving into the specifics of his plan. When pressed about specific tariff rates in an interview, Trump said “It may be more than that. It may be a derivative of that. A derivative of that.” His proposals seek to appeal to working-class voters, which make up a key voter block in the Midwest swing states. He has revived the Republican coalitions of old and harkened back to previous administrations to great acclaim among his blue-collar supporters. This has allowed Trump to become a highly popular figure among white, working-class midwest voters, who inhabit the dying towns where the loss of steel mills is lamented. His popularity among these voters is part of the reason that a majority of voters view Trump as more reliable on the economy.
Harris’s Plan
Harris has advocated for a self-described fair trade position, using tariffs lightly in combination with subsidies and international cooperation to revive the nation’s manufacturing base. Harris’s plan involves the US being the coordinator of the world, leading the charge on issues like fair trade (reducing unfair labor practices abroad and ensuring American markets are not abused) and climate change through international negotiation. Allies would be encouraged to apply pressure on China and other American foes. This pressure could come from a variety of methods, including sanctions, tariffs, and other means. Subsidies would be applied in struggling industries to stop their decline and open new facilities. Harris has also remained light on specifics, instead opting to discuss Trump’s policy, calling it a “sales tax on the American people”. Harris’s plan could also involve further attempts at negotiating multilateral agreements and organizing investments into areas like green steel. Harris has said her plan will be laser-focused on climate change and lowering prices for Americans.
Economic Analysis
Economists generally favor Harris’s plan, though neither candidate’s ideas are entirely popular among experts, with some suggesting both plans will provide a moderate boost to growth at best. The Peterson Institute, an independent think tank, developed a prediction based on economic models to determine what effect Trump’s policies will have on the economy. The prediction analyzed 3 particular pillars of Trump’s plan: Tariff increases, deportation, and increasing the President’s influence over the Federal Reserve. The prediction was split into two scenarios, a “low scenario” in which Trump’s policies are not enacted to their full extent, and a “high scenario” in which they are. Both scenarios see a drop in real GDP as soon as 2026, and the “high scenario” sees a dip of almost ten percentage points. On inflation, the low scenario sees an increase of 4.1% by 2026, and the high an increase of 7.4%.
While Harris’s proposed tariff policy seems to be a continuation of Biden’s policy, some economists have taken issue with other aspects of her economic proposals. Experts have raised concerns with policy proposals of hers like housing credits and minimum wage increases. According to estimates from the nonpartisan Congressional Budget Office (CBO), those policies “could increase wages for more than 18 million people, but also put about 700,000 Americans out of work,” while boosting the deficit by 50 billion dollars over 10 years.
Election OutcomeVoters’ perception of the economy and both candidate’s plans will be crucial as they head to the polls today, especially in swing states. States like Michigan, Wisconsin, and Pennsylvania rely heavily on manufacturing, and their voters, along with national voters, as a whole, are demanding economic change. Two-thirds of voters believe the United States is heading in the wrong direction. Because of this, both candidates have pitched themselves as agents of change, in the economy and the country. The outcome of the election could hinge on who has been more persuasive.