Opinion | Business and politics shouldn’t mix, but anything goes in a US election year

South China Morning Post
4 Min Read

In an analysis put out by Cornell University, Allen Carlson, an associate professor of government, and a specialist on Chinese foreign policy, said the move had more to do with US domestic politics.

“Presidential election years tend to stir things up in the US-China relationship, even when the two countries are on relatively good terms with each other. 2024 is not such a time,” he said.

“In the past Beijing has tended to take shifts in US policy during election years with a grain of salt. But this year may be different as [President] Xi [Jinping]’s China is in a stronger position than it was before. More importantly, this election cycle promises to be more turbulent than any that has come before it. And China policy will inevitably get drawn into the maelstrom.”

But, like his predecessor Donald Trump’s anti-China tariffs war, it may backfire. Nancy Chau, an economist and international trade expert also at Cornell, has warned that rising US protectionism could trigger “a full-on trade war”.

“The effects of tariffs on steel and aluminium in the United States are double-edged,” she said.

Biden accuses China of ‘cheating’ amid call for added steel, aluminium tariffs

“While the motivations may have been to protect workers in directly import-competing sectors, workers in other sectors that rely on imported steel and aluminium imports, including new and green industry jobs, can be adversely impacted.

“Other follow-on effects can include retaliatory responses that in the past have affected a diverse range of industries including agriculture, in particular. Since China is a top exporter of steel and aluminium products to the US, and a top export destination of US agricultural products, the direct, supply-chain, and retaliatory effects of any proposed tariffs warrant balanced and careful considerations.”

Interestingly, US Trade Representative Katherine Tai has also announced her office will investigate allegedly unfair practices in the maritime logistics and shipbuilding sectors from China.

Just last month, the United Steelworkers and allied unions demanded Tai’s office probe alleged Chinese unfair practices in exactly those industries.

A coincidence? The Democrats are really desperate for those union votes for the November election.

Practically every week now, Washington is opening a new front in economic warfare against China. But perhaps Beijing can take comfort in this instance. The Biden White House is also taking on Japan, a close ally, over Nippon Steel’s offer to buy US Steel.

The Japanese steel giant must have thought it was a sure thing. It is offering US$14.9 billion or US$55 per share, compared with a previously rejected offer of US$32.53 per share from rival Cleveland-Cliffs.

Shareholders are salivating. Last week, 98 per cent of them voted in favour of Nippon’s offer. But it’s an election year, so successful or not, Biden and other Democrats will put on a show to try to block the sale as the unions have demanded.

Biden’s rationale is at least somewhat plausible, based on the need to protect American jobs.

Several Democrat senators have, absurdly, warned against the sale because of Nippon’s supposed ties, as they put it, with the Chinese Communist Party, which therefore pose a national security risk.

I read that in the Financial Times when, as a news item, it really belonged in the satirical Onion online newspaper. Linguistically, US politicians can no longer say “China” – it always has to be “the Chinese Communist Party”.

Americans like to say business and politics don’t mix. But in America, especially during an election year, they always mix.