Biden's steel tariff call 'more talk than action': Strategist

According to the White House, the Biden Administration is looking to triple the tariff rate on steel and aluminum imports from China. The move comes as the administration continues to try to balance trade relations with China while protecting US interests. With the presidential election around the corner, Former President Donald Trump has made comments suggesting he will reignite the trade war with China he started in the previous administration.

Macrolens Chief Strategist Brian McCarthy joins Market Domination to give insight into the increased tariffs, how it will affect US-China relations, and the difference between Trump and Biden in their handling of trade relations.

In terms of what the increase in the tariff rate means, McCarthy states its "Sort of more noise than substance, frankly. Since Trump tariffed steel and aluminium, we're not really importing much at all directly from China. So raising those tariffs is really more a political message than anything substantial. Now, no one knows how much Chinese steel we're buying indirectly through Mexico and other places. So you know, they're not talking about cracking down on that which is probably the crux of the problem. So we're just getting a lot of noise here into the election. "

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This post was written by Nicholas Jacobino

Video Transcript

ALEXANDRA CANAL: And Brian, outside of TikTok, Biden is looking to triple tariffs on Chinese steel and aluminum. What impact do you think that could have on US China relations?

BRIAN MCCARTHY: That's more noise than substance frankly. Since Trump tariffed steel and aluminum, we're not really importing much at all directly from China. So raising those tariffs is really more a political message than anything substantial. Now no one knows how much Chinese steel we're buying indirectly through Mexico and other places. So they're not really talking about cracking down on that, which is probably the crux of the problem.

So we're just getting a lot of noise here into the election. And frankly, some of this stuff we've been debating for years, if not a decade or more. And in terms of-- other than the Trump tariffs, there's really not been a lot of practical pushback against China's overcapacity and its domination of a number of industries.

So the talk is really getting louder, it's becoming shouting as we head into the elections. But it's still not entirely clear to me that politicians in either the US or Europe are really ready to stand up and do something about what is going to be an increasing flood of Chinese exports and our imports because the Chinese economy is flat on its back. It's really the only lever they have to maintain growth in their economy, is to export.

So this is an issue that's really going to heat up into the election. But again, in terms of substantive actions, it's still a lot more talk than action frankly.

JOSH LIPTON: Brian, I'm interested with this election coming up. When it comes to their just the approach to their general approach to China, Brian, what are the big differences at this point in your opinion, between Biden and Trump, because it does seem both at this point are pretty tough on China?

BRIAN MCCARTHY: Again, they're both tough in terms of words. Now substance-- Trump was tough for a while, he raised a bunch of tariffs, but in the end he caved. Basically. So 2019 we're heading into election and Trump made an agreement to take the pressure off China to at least temporarily give up on forcing China to make fundamental structural changes to their economic system in exchange for basically China buying a bunch of soybeans and other stuff.

Subsequently, China didn't buy those soybeans and other stuff, and the Biden administration never really followed up. So Trump talks a big game, but whether he's really up to that task, I don't know, because the bottom line crux of the problem is actually taking steps to decouple from China is insanely expensive at this point. And whether we can actually take substantive steps to decouple without causing a recession in the West is unclear.

So these are very, very difficult choices that our system has struggled to make, frankly. So again, the talk will reach a crescendo in coming months. We're hearing it from Europe. Europe is talking about tariffs on Chinese EVs, which are pouring into Europe. But on the other hand, the chancellor of Germany was in China last week saying nice things. So there are constituencies on both sides of this issue.

And again, to me it's an open question whether either the US or Europe will take some substantive steps to crack down on these imports.