Topic Category: Trade & Finance

In January, President Joe Biden will inherit a trade policy that has left the U.S. role as a leader of the world trading system in grave doubt. After World War II, the United States helped construct a carefully balanced trading system with modest liberalization and a limited but important role for international agreements and institutions. But Trump and his trade team have undermined this system in the service of an ideology consisting of high tariffs, unilateralism, and hostility towards the rule of law.

The Mongolia Third Neighbor Trade Act (H.R. 2299/S. 1188), which would provide duty-free access to the U.S. market for products made in Mongolia using Mongolian cashmere, stands to be a win-win for the U.S. and Mongolia, a stalwart democratic American ally in Northern Asia. Passage of the legislation, currently languishing in Congress, would benefit both sides by facilitating increased trade.

A few weeks ago, Senator Josh Hawley wrote a New York Times op‐ed calling for “abolishing” the World Trade Organization (WTO). I responded to Hawley’s piece here, pointing out the various ways that he had misunderstood the WTO. Hawley’s op‐ed was apparently intended to lay the foundation for the joint resolution he introduced to withdraw the United States from the WTO. As I noted here, a Senate vote on this resolution is likely in late July.

Recent trade battles with China, Mexico, Canada, and Europe have reduced trade flows. Now, with the outbreak of COVID-19 severely impacting international commerce, many argue that globalization will soon be dead. Globalization is not dying. Rather, it’s evolving, and existing trends are accelerating. American companies and workers would be wise to prepare for what’s ahead.

Some people talk about trade as though it were an end in itself. It’s not. Trade is a means to an end. We trade so that we can specialize. We specialize so that we can produce more. We produce more so that we can consume and save more. That is how we create wealth and raise living standards.

In his recent State of the Union address Tuesday night, President Trump touted the strong US economy and low unemployment rate, claiming credit for a “great American comeback” driven in significant part by his trade policies. The president was right about the general health of the US economy, but not about the role of his trade policies.

A novel feature of the Trump administration’s “Phase 1” trade deal with China announced December 13, is that it would require China to increase its purchase of US goods and services by a total of $200 billion in the next two years. It’s a demand that, even if met, won’t accomplish President Donald Trump’s China-trade goals of promoting US exports and liberalizing the Chinese economy.

President Trump has called out China for unfairly subsidizing its state-owned enterprises, not enforcing intellectual property protections, placing trade restrictions on U.S. firms, and pressuring them to hand over technology in exchange for market access. If these problems are eliminated, more U.S. companies will invest there. But is this what President Trump wants?

On the campaign trail, Donald Trump vowed to strengthen enforcement of existing trade rules and negotiate better trade deals than his predecessors had. With his national security tariffs on steel and aluminum, his safeguard tariffs on washing machines and solar components, his broad trade war with China, and the looming specter of new barriers for automobile imports, President Trump has delivered—for better or worse—on the first promise. On the second, he has little to show.