If President Donald Trump's high-stakes trade talks at the G-20 summit with Chinese President Xi Jinping are a bust, the ongoing trade war could become a potent issue for Democrats in the 2020 election.
Trade talks between the world's two largest economies stalled out last month, and some experts and administration officials are predicting that Trump's meeting with Xi on Saturday could rekindle the negotiations. A senior White House official told CNBC that Trump might agree to a truce in the trade war without asking for very much from Xi in that meeting.
But current and former administration officials have cautioned that a deal with China likely won't come at the G-20 itself. Trump has also threatened on multiple occasions to levy duties on $300 billion in Chinese goods that are imported to the U.S., which would result in taxes on nearly all U.S. imports of Chinese products.
The Trump administration has slapped tariffs on $250 billion worth of Chinese goods. China has responded with $110 billion in tariffs on U.S. goods, as the two sides grapple over issues including trade deficits, alleged Chinese intellectual property theft and forced technology transfers.
U.S. tariffs on China and other sources have reportedly already raised prices on some goods. The Becker Friedman Institute of Economics at the University of Chicago, for instance, found that the price of washers and dryers rose by 12% in response to tariffs levied in 2018.
Taxing all imports from China would do the same for many more products — and that could be a liability for Trump's reelection chances.
Trump has long touted the benefits of tariffs as a way to bring companies back to the U.S. and make tax revenue. But tariffs also raise costs on American families by hundreds of dollars: the Federal Reserve Bank of New York found that tariffs imposed 2018 led to an annual cost of $419 for the typical household.
When Trump hiked tariffs on $200 billion of Chinese goods to 25% in May after the trade talks broke down, that annual cost shot up to $831 per year, according to the New York Fed.
Trump could open himself up to more attacks from Democrats on tariffs as the 2020 election nears. And while it was hardly the main focus of the first presidential debates, some candidates have already lashed out.
"The tariffs and the trade war are just punishing businesses and producers and workers on both sides," entrepreneur Andrew Yang said during the Democratic primary debate Thursday night.
China's retaliatory tariffs, which hit a wide variety of agricultural products, are already deeply affecting U.S. farmers in states that Trump won in the 2016 election.
Yang recalled an interaction he had with an Iowa farmer "who said he spent six years building up a buying relationship in China that's now disappeared and gone forever. And the beneficiaries have not been American workers or people in China. It's been Southeast Asia and other producers that have then stepped into the void."
The White House in May rolled out a $16 billion farm and ranch aid package for those affected by the trade war. Trump assured farmers that his tariffs on Chinese imports would cover the cost.
South Bend, Ind., Mayor Pete Buttigieg appeared to be citing the New York Fed's analysis when he knocked Trump's tariffs at the debate Thursday night. "Tariffs are taxes. And Americans are going to pay on average $800 more a year because of these tariffs," Buttigieg said.
"Folks who aren't in the shadow of a factory are somewhere near a soy field where I live. And manufacturers, and especially soy farmers, are hurting," Buttigieg added.