President Joe Biden and former President Donald Trump went toe-to-toe at their first debate of the election season on Thursday evening, and somewhere amid a painfully protracted back-and-forth about golf handicaps, the former and current commanders in chief grazed issues that stand to substantially impact the industry over the course of the next four years.
As is par for the course, both candidates hyped up their records and traded mostly dull barbs about their opponent’s performance. Pundits largely agreed that there was no true victor in the room after 1.5 hours, with neither candidate able to cut to the heart of the issues, provide compelling evidence of their suitability for office, or offer up substantive arguments for why Americans should look to the future with optimism.
Economy and inflation
There were a few noteworthy moments, like when the candidates debated whose administration caused the lingering inflation that continues to impact American families. Trump insisted that Biden inherited “essentially no inflation—it was perfect, it was so good.”
Biden pointed to the fact that he took on nearly 15 percent unemployment when sworn into office, saying that Trump “absolutely decimated the economy—that’s why there was no inflation at the time.”
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Economists have pointed to a confluence of factors, from the 2021 supply chain slowdown to rising prices on commodities across the globe, economic stimulus packages passed by both presidents during the pandemic, pent-up consumer demand, a housing crisis and consumer psychology surrounding the state of the economy, that have contributed to the rise of inflation.
But it is, and has been, softening. U.S. Bureau of Economic Analysis data released Friday morning showed the personal-consumption expenditures price index incurred a 0.1-percent increase from April to May, while the index rose 2.6 percent from a year earlier, as expected. Economic analysts said the movement indicates positive progress, with prices on goods increasing at the slowest pace since 2021.
Still, Biden said Thursday night that he doesn’t blame Americans who are disappointed. “Inflation is still hurting them badly.”
Trade, taxes and China
CNN moderators Dana Bash and Jake Tapper attempted mightily but largely in vain to shepherd the discussion in a linear direction. Some of the night’s pithier exchanges took place during the deviations from scripted questions—including talk of U.S. trade relations and tensions with China.
Both the former and current commander in chief have espoused philosophy of decoupling from the country long regarded as the global backbone of manufacturing as concerns about its dominance have deepened.
Trump implemented the first punitive duties on China-made goods under Section 301 of the Trade Act in 2018, lengthening the list of covered goods the following year. Biden, throughout his first term in office, has committed to maintaining them, and in May even added $18 billion in imports to the roster, already worth more than $300 billion.
But the candidates’ approaches to—and reasoning for—freezing out China differ. President Biden balks at being called a protectionist, insisting that tariffs underpin the administration’s investments in American industry through the Bipartisan Infrastructure Law, the CHIPS and Science Act and the Inflation Reduction Act.
“I want competition with China, not conflict,” Biden said during his State of the Union address in January.
Trump has reveled in the rivalry, ratcheting up the tension with bombastic rhetoric. For months, the candidate has threatened to raise the duties on Chinese imports by a whopping 60 percent if reelected.
On Thursday night, Tapper also questioned Trump on his proposed “All Tariff Policy,” which would impose a 10-percent universal tax increase on imports from across the globe. “How will you ensure that that doesn’t drive prices even higher?” the moderator asked.
“It’s not going to drive them higher. It’s just going to cause countries that have been ripping us off for years, like China—and many others, in all fairness to China—it’s going to just force them to pay us a lot of money, reduce our deficit tremendously, and give us a lot of power for other things,” the presumptive Republican nominee said.
Those “other things” include income tax cuts for individuals making more than $400,000, which Trump made during his presidency and has vowed to uphold if he wins another term in office. President Biden’s plan is to allow the tax cuts for the wealthy to expire in 2025 while preserving reductions for those making less than $400,000.
“The tax cuts spurred the greatest economy that we’ve ever seen just prior to Covid.…It was so strong that we were able to get through Covid much better than just about any other country,” Trump said. “We took in more revenue with much less tax and companies were bringing back trillions of dollars back into our country.”
“Look, the fact of the matter is that he’s dead wrong about it,” the current president said, reaching for a familiar Bidenism. “These 10-percent tariffs on everything coming into the country—you know what the economists say? That’s going to cost the average American $2,500 a year and more, because they’re going to have to pay the difference in food and all the things that are very important.”
A May report from the Peterson Institute for International Economics (PIIE) indicated that increases in tariffs would only partially pay for Trump’s proposed tax cuts, while the increased duty burden would cost middle-class families at least $1,700 more each year.
Biden also said Trump’s tax cuts didn’t address the trade deficit with China under his administration, calling it “the largest deficit of any president in American history” and stressing that Trump had not made “any progress with China” during his tenure.
During 2018, Trump’s second year in office, the U.S. saw a massive $419-billion goods deficit with China, the highest deficit ever recorded. After falling considerably over the second half of his presidency and the first year of Biden’s stay in office, the deficit spiked again, hitting over $382 billion.
Since that time, imports from China have been in relative free-fall, bucking trends of the past two decades. In 2023, the deficit fell to $279 billion as China saw its biggest overall export drop in 30 years. “We are the lowest trade deficit with China since 2010,” Biden said on the debate stage. Data from the first four months of 2024 show the U.S.-China trade deficit hovering at $80 billion.
With those figures as a backdrop, Trump nonetheless insisted that the U.S. is currently experiencing “the largest deficit in the history of our country under this guy,” calling Biden a “Manchurian Candidate” who takes money from Beijing.
“But do you notice? He never took out my tariffs because we bring in so much money with the tariffs that I imposed on China. He never took them away. He can’t because it’s too much money. It’s tremendous,” he said.
Industry weighs in
In reality, both candidates have imposed tariffs on Chinese imports as they spar for the toughest-on-China stance—and the industry has become all-too familiar with the strategy over the course of seven years.
“Last night’s debate reminds us all too directly that on trade policy, both candidates have embraced the status quo on tariffs—a very regressive and misogynistic tool,” American Apparel and Footwear Association (AAFA) president and CEO Steve Lamar told Sourcing Journal.
“Tariffs are taxes paid by U.S. importers that fuel inflation. It is false for either candidate to hide behind tariffs as the approach to being tough on China when it is actually tough on American businesses and hardworking American families,” he added. “We need a more positive and predictable approach that incentivizes smart trade, supports investment, and invigorates competition.”
On the other side of the issue, National Council of Textile Organizations (NCTO) president and CEO Kim Glas said the candidates should double down, not ease up, on efforts to protect U.S. industry through duties that handicap China trade.
“Regrettably, China’s unchecked foreign predatory trade practices coupled with a lack of customs enforcement and misguided trade policy proposals have created an unstable market dynamic that is threatening the future of domestic textile manufacturing,” she said in a statement.
“Given rapidly deteriorating market conditions, we ask the administration to help level the playing field to further increase tariffs on finished textile and apparel and certain inputs.”
“The continuation of tariffs is going to be in place for a long time, unfortunately, as it relates to China,” Footwear Distributors and Retailers of America (FDRA) president and CEO Matt Priest believes. “The challenge that we have as an industry and a society is that we have one president, President Biden, who sees it as a tool to accomplish certain goals…and a former president who’s running on completely reconfiguring the economy and taking us back to a time when the majority of revenue to the federal government was tariff revenue.”
The federal income tax brings in 34 times the current tariff revenue, Priest estimated.
“The irony of all of this is that we have both candidates talking about inflation, inflation, inflation—and there’s one thing they can do about it. They can lower tariffs on products that are imported to try to tamp that down,” he told Sourcing Journal. “I think we’re just in a nationalistic environment, and it will take a different type of candidate—one who knows how to lead, one who has courage, and one who understands global economies more than these two—to step up and change the narrative around tariff policy.”