Trump and Biden on trade: Same diagnosis, different prescription
International trade was never much of an issue in presidential campaigns until Donald Trump.
In 2016, he made trade a key plank in his economic nationalism platform, denouncing America’s biggest free trade pacts and promising a whole new way of doing business with the rest of the world.
Trade is a big deal again in the upcoming election, and it’s largely over the escalating battle with China, until recently America’s biggest trading partner.
Both Trump and his Democratic opponent, Joe Biden, agree the U.S.-China trading relationship isn’t working to America’s advantage. The difference lies in the way they view the problem and their approaches for addressing it.
At the core of President Trump’s trade policy has been his focus on America’s long-running trade deficit with the rest of the world — and doing whatever he can to reverse it.
His main tool: Slap tariffs on countless goods, against allies and rival nations alike, particularly China, in an attempt to curb imports, increase domestic production and pressure trading partners to buy more American products. But by the trade balance measure, Trump’s tariffs haven’t worked: The U.S. trade deficit is as large as ever, even this year as the pandemic has shrunk imports and exports.
Trump’s approach to trade has been guided by his “America First” foreign policy. He has eschewed multilateral trade deals — he withdrew from the Trans-Pacific Partnership immediately after entering office — and has sought to discredit and weaken the World Trade Organization, the rules-based arbiter of trade disputes that the United States helped to establish.
Economic output fell 32.9% in the second quarter, more than at any time since the Great Depression.
Trump fulfilled a top campaign promise to renegotiate the North American Free Trade Agreement, the largest U.S. trade pact. The new accord, which took effect this summer, includes some substantive changes, including rules aimed at boosting domestic auto production. But the newly named United States-Mexico-Canada Agreement largely contains updates reflecting the new digital economy.
In January, Trump announced a Phase One trade deal with China in which Beijing agreed to ramp up purchases of U.S. farm and other goods by some $200 billion over two years. That was just weeks before COVID-19 began paralyzing the Chinese and global economies. Now it’s far from clear that China can meet those commitments, or that the deal will survive the rapid deterioration in U.S.-China relations since the coronavirus outbreak.
Joe Biden may agree with Trump’s basic diagnosis that U.S. trade policy hasn’t worked out so well for Americans, but the former vice president’s answer to remedying the problems is expected to be very different in at least one significant way: He intends to take a multilateral approach, enlisting allies and partners in a bid to achieve U.S. trade and economic goals.
That doesn’t mean Biden will be rushing to rejoin the Trans-Pacific Partnership. The initial 12-nation trade deal forged under President Obama never gained enough support from Democratic lawmakers and progressives in the party, who saw too many giveaways to multinational corporations.
Biden will rally allies and set a new tone, yet underneath, his China policy may look closer to Trump’s than to Obama’s a decade ago.
Biden, however, wants to rebuild frayed relations with the European Union and other parties to adjust and work through, not dismantle, global institutions including the WTO to address unfair trade practices and inequities in the trading order.
On trade with China, the former vice president has said that the United States needs to reduce its dependence on the Asian giant, especially when it comes to critical products such as medicine and personal protective equipment. Biden’s economic plan includes a $400-billion federal spending plan to buy American-made goods.
Biden has emphasized that the U.S. needs to rally allies to fight back against commercial abuses by China, and instead of trade deficits, he wants to focus on structural elements of Beijing’s industrial policies, such as intellectual property theft and unfair state subsidies for companies. Biden has also been critical of the way Trump has applied tariffs and the collateral damage they’ve caused on farmers and manufacturers, but neither has he said he would be undoing the tariffs anytime soon.
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