President Trump’s trade policy has been defined by protectionism, cronyism, and mean‐spiritedness. President Biden’s will be more polite.On substance, geopolitics and domestic politics are sure to crowd out economic considerations in shaping U.S. trade policy. The best we can hope for is that Biden’s team will be resolute and more competent managing an increasingly adversarial relationship with China—a priority which will shape all major U.S. trade policy decisions for years to come.

Of course, President Biden will be advised to restore some semblance of trade normalcy. But let’s not forget just how dysfunctional normalcy was before America‐first economic nationalism took center stage and made normal look idyllic.

Going back to that old dysfunction, when congressional Democrats and their patrons largely opposed and congressional Republicans and their patrons largely supported trade agreements wouldn’t be ideal. But it would be preferable to the current dysfunction, where both parties favor Buy American provisions, supply chain repatriation, tariffs, industrial policy, and trade agreements that prioritize enforcement over liberalization.

To be sure, Biden won’t be returning us to the halcyon days of trade liberalization. Frankly, those days are long gone. U.S. trade liberalization has been mostly “all talk, no action” for more than a quarter century now.

Trade agreements, refraining from protectionism, and abiding by the rules of international trade are still in the cards.

The Uruguay Round of multilateral trade talks ended in 1994, establishing the World Trade Organization in 1995. That was the pinnacle of a half‐century of trade liberalization. Since then efforts to go deeper and wider—the Doha Round under the auspices of the WTO, various plurilateral negotiations within the WTO, the Transatlantic Trade and Investment Partnership with the European Union, the Trans‐Pacific Partnership with 11 other countries, and other initiatives—have failed at one stage of the process or another.

During the presidency of George W. Bush, there was a flurry of negotiating activity in the short span of 2003–2006, which produced bilateral trade agreements with 17 mostly small countries. Nearly every one of those deals passed Congress on sharply partisan lines. But last year we witnessed the return of trade bipartisanship in Washington. The United States‐Mexico‐Canada Agreement attracted broad support from both parties, but for illiberal reasons, including the promise of less regional trade.

At the very least, trade policy watchers hope Biden will undo some of Trump’s mischief. Among the actions Biden may take are rescinding the steel and aluminum tariffs imposed on imports from most countries under Section 232 of the Trade Expansion Act of 1962; revoking at least some of the tariffs imposed on imports from China under Section 301 of the Trade Act of 1974; initiating the process of rejoining the TPP (now called the Comprehensive and Progressive Trans‐Pacific Partnership), from which Trump withdrew the United States just days after his inauguration; and reaffirming U.S. commitments to multilateralism and the WTO.

In The Spotlight

But each of these moves, which have obvious economic and diplomatic upsides, would be difficult politically for Biden—at least in the short‐term. Both sets of tariffs have created domestic constituencies in the Rust Belt, which are committed to their continuation.

Rhetorically, for decades, Democratic politicians have championed Rust Belt concerns—real and imagined—about trade: “unfair” trade, global steel overcapacity, the “decline” of manufacturing, Chinese malfeasance, trade deficits, outsourcing, and so on.

Then along came Trump, who commandeered the Democratic Party playbook on trade, making good on promises unkept by Democrats in the past. Biden, who campaigned as the “tougher‐on‐China” candidate, promising to expand Buy American provisions and to compel supply chain repatriation, and emphasizing his blue‐collar, Scranton roots is going to find it very difficult to rescind any of Trump’s tariffs anytime soon. The Rust Belt flipped for Biden and, indeed, the continued blueness of Pennsylvania, Ohio, Wisconsin, and Michigan cannot be taken for granted.

Meanwhile, in case anyone has forgotten, President Obama struggled mightily to get merely a smidgeon of Democratic congressional support for the TPP. Rejoining the TPP is integral to whatever strategy emerges over the coming months for U.S. reengagement in Asia as a counterweight to China. The Biden team knows that. They just need to figure out how to sell to Democrats a deeply unpopular trade agreement as a geopolitical imperative.

Obama tried and failed with this approach in 2016, but the state of affairs with China wasn’t quite as dire then as it is now. Biden may succeed here, but probably not in 2021.

Objectionable tactics aside, the Trump administration’s efforts to draw attention to various WTO shortcomings have succeeded. Unfortunately, the Trump team offered nothing to help fix those problems and instead exacerbated them by kneecapping the Appellate Body, failing to engage in reform efforts, and refusing to endorse the (otherwise) consensus candidate for the open director general position.

Biden could remove some of those impediments quickly—and may very well do that—but the bigger, looming question is whether and how the United States and China can coexist within the WTO. Both have demonstrated preferences for ignoring the WTO rules when it suits their aims, and for both countries, the goal of security and achieving or maintaining technological supremacy, which will undoubtedly encourage continued WTO rule violations, will take priority.

This bodes ill for the future of the WTO, and any substantive WTO initiatives taken by the Biden administration will probably have to be consistent with the objectives of a comprehensive China policy that will soon emerge from the administration.

The bottom line is that Biden’s trade policy is likely to be a component of a broader geopolitical strategy. Trade agreements, refraining from protectionism, and abiding by the rules of international trade are still in the cards, as long as they align with the objectives of national security and technological preeminence, and domestic politics permit.

This article appeared on Cato at Liberty.

Daniel Ikenson
About The Author Daniel Ikenson [Full Bio]
Dan Ikenson is an author, speaker and Director of The Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, focusing on WTO disputes, regional trade agreements, U.S.-China trade issues, steel and textile trade policies, and antidumping reform.

You don't have permission to view or post comments.

Quick Search

FREE Impact Analysis

Get an inside perspective and stay on top of the most important issues in today's Global Economic Arena. Subscribe to The Manzella Report's FREE Impact Analysis Newsletter today!