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. Both are talking a lot about “made in America,” and are keen on reducing U.S. dependence on China for personal protective equipment and other critical medical supplies.
In that sense, there’s a strong protectionist bent to both men. But there are sharp differences as well, in styles, objectives and how they see U.S. trade policy and what it says about America’s role in the world.
At the core of Trump’s trade policy has been his focus, some would say obsession, on America’s long-running trade deficit with the rest of the world. His aim has been to reverse it.
And befitting a president who once referred to himself as the “tariff man,” his main tool has been to slap hefty duties on countless imported goods, against allies and less friendly nations alike, particularly China. Have they worked? Not by the trade balance yardstick: The U.S. trade deficit is as large as ever, even this year as the COVID-19 pandemic has shrunk imports and exports.
Trump’s actions on trade have often had a scattershot way about them, but generally he’s been guided by his “America first” foreign policy. He has acted unilaterally. And he has eschewed multilateral trade deals. He withdrew from the Trans-Pacific Partnership immediately after entering office, preferring instead to cut bilateral deals to leverage America’s unmatched economic power in one-on-one talks. Trump has sought to discredit and weaken the World Trade Organization, or WTO, the international 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.
Thanks to his chief trade negotiator, Robert Lighthizer, Trump did fulfill 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 new rules aimed at boosting domestic auto production. But many analysts agree that the newly named United States-Mexico-Canada Agreement isn’t a fundamental rewrite of the original 1993 pact, but a still much-needed update to reflect the new digital economy.
Then in January, Trump announced a Phase 1 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 — and Trump and his top Cabinet members started turning up the heat on Beijing, blaming it for the pandemic and for cratering the American economy.
While neither side has pulled out of the Phase 1 deal, it’s far from clear that China can meet those commitments. So far, the deal has survived the rapid deterioration in U.S.-China relations since the coronavirus outbreak.
Biden’s strategy in addressing America’s economic grievances with China is expected to be more consistent and very different in at least one other 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 was forged under President Obama when Biden was vice president. But the deal never gained enough support from Democratic lawmakers and progressives in the party, who saw too many giveaways to multinational corporations and its labor enforcement provisions as too weak. And Biden has distanced himself from the Pacific pact, saying only that he would not back it in its current form.
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.
Neither has Biden said much about the WTO and how he would address what some see as its inherent failings in dealing effectively with trading inequities and China’s mercantilist behavior. But he is more likely to try to repair, rather than hobble, global institutions and the rules-based international framework that the United States has long championed.
On the campaign trail, the former vice president has sounded a bit like Trump on China, reflecting the increasingly critical view of Beijing among lawmakers of both parties, not to mention American public opinion. Biden beat Trump to the punch in laying out a plan to have the United States reduce its dependence on the Asian giant for critical products such as drugs and personal protective equipment. What other goods and services that he would consider critical to American security is less clear.
But a Biden China policy and potential clash with Beijing will be tempered by his efforts to enlist allies in combating China’s commercial abuses, which include intellectual property theft and various Chinese Communist Party interventions in businesses. In joining with other nations, Biden may be able to exert greater pressure on Beijing to turn from its errant ways. At the same time, actions from a multilateral approach can be expected to be more deliberate and measured.
Secondly, Biden’s economic plan focuses more on what changes he can effect at home rather than abroad. The plan includes $300 billion in public spending to boost research and development, and an additional $400 billion in a “Buy American” government procurement program to create demand and enhance domestic production.
As for Trump’s existing tariffs on many Chinese goods that he would inherit as president, Biden hasn’t said what he would do with them. Biden has been critical of the way Trump has applied tariffs — pointing out the ensuing damage to American farms and manufacturers — but he may decide to keep them in place for awhile. Like Trump, he may find they are useful chips to have in dealing with China.
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