Sen. Tim Scott (R-SC) said China should be stripped of its “developing nation” status, an international designation that grants it special privileges and flexibility over the United States, as a means of ensuring the U.S. is not put at a disadvantage in trade.
Scott, who is vying for the Republican nomination for president, outlined some of his economic vision during an interview this week with the Washington Examiner. In response to a question about what the trade and tariff policy of a Scott administration would look like, he noted that China is able to receive perks in the international economic system because it is still designated as a developing country.
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“Their developing nation status allows them to have an unfair advantage over our economy,” the 57-year-old South Carolina senator said.
Despite being the second-largest global economy, the United Nations still deems the People’s Republic of China as “developing” and doesn’t place it in the same bucket as developed economies or economies in transition. That gives China prized benefits and flexibility from several international entities, such as the World Trade Organization and World Bank.
For instance, the WTO provides countries with the status longer periods of time to meet certain financial and trade obligations. Additionally, because of the designation, the World Bank gives Beijing billions of dollars’ worth of loans despite the country’s income level otherwise making it ineligible for such funds, according to the Wilson Center.
Scott mentioned stripping China's developing nation status as an alternative to 10% across-the-board tariffs, which former President Donald Trump has floated recently. Scott said to impose such a regime “is to actually tax the American people and increase the prices of everything that we need.”
Tariffs typically raise prices for consumers domestically.
Scott noted that targeted tariffs — that is, imposing tariffs strategically and not in the blanket sense like Trump has proposed — have been effective in the past.
On the China front, a President Scott would also work to enact further measures to stop Beijing from stealing U.S. intellectual property. “Ultimately, when they steal our innovation and our imagination, what they are basically doing is creating what we thought of and using it against us,” he said.
On fiscal policy, Scott said a major priority is to make key provisions from the 2017 Tax Cuts and Jobs Act permanent. As a member of the Senate Finance Committee, he played a role in drafting the legislation.
He said there should also be a focus on what can be done to encourage small businesses to build here in the U.S. and not abroad and one way to do that is by restoring full expensing. Full expensing allows businesses to deduct immediately the cost of investments from their taxable income rather than over the course of years according to complicated depreciation schedules.
Also of note, Scott wants to safeguard Social Security. He ruled out raising the retirement age for adults and said it would be penalizing them for their hard work.
“If you’re talking about a 3-year-old, maybe it’s a different conversation,” Scott said.
But he said a better way to protect and secure the Social Security system in the long run is by supercharging economic growth, which would in turn provide more tax revenue to the Treasury and secure the country’s fiscal footing.
Scott said he also wants to look at “opportunity zones 2.0.” Opportunity zones were created as part of the 2017 tax cuts and give tax breaks to businesses in impoverished areas to spur investment. The 2017 legislation only authorized their use for a decade, though.
Scott said opportunity zones 2.0 “would allow us target those areas of the country, specifically rural America, that could be the home of brand new factories around the country. That would provide a haircut of 30% off the profits, which would be the same as reducing the 21% corporate tax rate down significantly.”
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Among other planks in his economic platform, Scott wants to cut nondefense discretionary spending back to its pre-pandemic baseline and end automatic raises for federal bureaucrats. He's also pitching welfare reform and stronger work requirements.
The South Carolina senator also ramp up domestic oil and gas development and double the country’s nuclear energy over the next decade.