Biden aims for new course on trade, breaking with Trump and Democratic predecessors
Accepting the well-respected official favored by almost all other U.S. trading partners would mark a sharp break from President Trump’s go-it-alone stance and begin reshaping international economic policy after years of tariff threats and trade wars.
Biden hasn’t said publicly whether he will endorse Okonjo-Iweala, a naturalized U.S. citizen. And a spokesman for his transition team did not respond to a request for comment.
But whatever he decides about the WTO leadership, Biden’s handling of trade policy is expected to represent a departure from that of both Trump and past Democratic presidents.
The Wall Street-friendly push for trade liberalization that held sway for a quarter century after the Cold War has been rendered obsolete by domestic political developments, supply-chain security concerns triggered by the coronavirus pandemic and growing alarm about China’s rise.
“We need to do things differently,” said Cathy Feingold, director of the AFL-CIO’s international department. “You can’t go back.”
Biden and his advisers have sketched a trade policy that echoes Trump’s focus on manufacturing jobs and seeks to use foreign economic engagement to promote the U.S. middle class.
But unlike Trump, Biden describes most foreign nations as potential partners, not adversaries bent on unfairly competing for commercial spoils. The Democrat is likely to substitute industrial policy for tariffs, seeking to revive domestic factories with a $400 billion “Buy America” initiative and $300 billion in clean energy research.
Katherine Tai, the top trade lawyer for the House Ways and Means Committee and Biden’s choice as chief U.S. trade negotiator, called last summer for bolstering U.S. competitiveness and workers’ skills rather than concentrating on tariffs and enforcement efforts.
“Policy has been disproportionately shaped by what’s good for corporations. Now, the focus will be: What’s it mean for workers?” said one Democratic congressional aide, who spoke on the condition of anonymity for lack of authorization to speak publicly.
Still, Biden will confront the same question that has bedeviled U.S. policymakers for three decades: How can the United States shape for maximum benefit its overseas commercial engagements?
In the 1990s, as the Soviet bloc crumbled and China opened its market, U.S. presidents sought greater economic efficiency through liberalized trade and promised to compensate American workers who suffered as a result.
That financial support and retraining help, however, was inadequate, leaving millions of factory workers at the mercy of low-wage foreigners. The resulting blue-collar resentments helped elevate Trump, who vowed to shield American jobs behind a tariff wall.
The populist Republican, however, proved more adept at identifying problems than solving them. The U.S. trade deficit, which he assailed as a drain on national wealth and vowed to close, stands at a 14-year high. And after growing by 4 percent during his first three years in office, manufacturing employment is now lower than when he took office.
On the campaign trail, Biden promised a “pro-American worker tax and trade strategy.”
In practice, that means labor and environmental concerns will now get top billing at the negotiating table, potentially overshadowing corporate America’s investment-oriented agenda. New agreements might borrow provisions from Trump’s North American trade deal requiring a certain percentage of work to be conducted in high-wage countries such as the United States. With China, U.S. diplomats may spend more time on Beijing’s use of forced labor in Xinjiang province, supplanting Trump’s focus on forced technology transfer.
“I’m somewhat more optimistic than I expected to be,” said Public Citizen’s Lori Wallach, a longtime critic of trade liberalization.
Biden will face a long to-do list, including decisions about how to handle Trump’s tariffs on most Chinese goods as well as on imported steel and aluminum. The Democrat will inherit unfinished negotiations with the United Kingdom and Kenya. And he must balance calls to rejoin a Pacific trade deal that Trump quit with union worries about potential job losses.
The shift may be most evident in relations with Europe, which Trump has castigated and threatened with auto tariffs. Biden’s hopes of reestablishing robust trans-Atlantic ties depend upon resolving a thorny dispute about European efforts to tax U.S. digital economy giants.
Still, no major policy moves are expected before the completion of a 100-day supply-chain review intended to avoid a repeat of the medical product shortages that the United States experienced early in the pandemic.
“I would expect trade to be on a slower track,” said Michael Wessel, a longtime trade consultant. “It’s climate change and infrastructure that are the priorities.”
But with Australia, China, Japan and the European Union having reached new trade deals, the incoming president won’t be able to afford an indefinite hiatus.
“Our allies in Europe and Asia have cut deals with the Chinese, so the incoming administration shouldn’t take too long to lay out our trade agenda,” said Myron Brilliant, executive vice president of the U.S. Chamber of Commerce.