WASHINGTON (AP) – In his first weeks in office, President Joe Biden wasted no time dumping a series of key Trump policies. He rejoined the Paris climate agreement. He ended a ban on travelers from mainly Muslim countries. He has canceled the Keystone XL oil pipeline. He revoked a ban on transgender people in the military. And so on.
However, Biden and his team are tiptoeing around one of Donald Trump’s most divisive legacies: his go-it-alone moves to start a trade war with China and defeat some of America’s closest allies with a storm of tariffs on their own. steel, aluminum and other goods. By turning seven decades of presidential support for free trade on its head, Trump pledged to narrow the US trade deficit and restore millions of lost US factory jobs.
In the end, by most accounts, the Trump tariffs achieved very little – and managed to thwart some of America’s closest trading partners.
But for now, the Biden government appears to be taking a cautious and deliberate approach to trade. Most notably, perhaps, is what Biden hasn’t done: He didn’t call off Trump’s trade war with China. He has not pledged to reduce or cancel tariffs on imported metals or end a deadlock that prevents the World Trade Organization from acting as an arbiter in global trade disputes.
Instead, government policymakers are focusing on other, unrelated priorities – spreading COVID-19 vaccines as quickly as possible and providing much more help to a pandemic-hit economy that has yet to regain nearly 10 million lost jobs since February.
“He will take his time,” said Mary Lovely, a Syracuse University economist and senior fellow at the Peterson Institute for International Economics. “Biden has said repeatedly that he needs America to be stronger before tackling many of these trade issues.”
One factor may be that reversing all of Trump’s policies could increase risks for a Democrat close to unions who is unhappy with the US free trade consensus in favor of Trump. Politically, Biden relies on support in Midwestern manufacturing cities. These areas have suffered from cheap imports from China, Mexico and elsewhere.
“There is competition for the swing-state voters who are in favor of (trade) protection,” said Daniel Ikenson, director of trade policy studies at the libertarian Cato Institute.
Democrats are still stung by Trump’s surprise 2016 victory and some of the trade-related factors behind it. Trump has given up the modern Republican Party’s support for free trade agreements favored by US companies with deep foreign connections. Instead, Trump set himself up as a populist defender of long-suffering manufacturing workers – an America first champion who would eradicate unfair trade practices and restore American factory jobs.
For the Democrats, Trump’s 2016 victory, thanks in no small part to blue-collar voters, was “a hard lesson about the dangers of a trade policy that thinks not of working people, but of (taking advantage of) finance and agribusiness, ”said Lori Wallach, director of Public Citizen’s Global Trade Watch.
Aware of that lesson, Biden’s team, led by a president who rarely tires of reaffirming his lifelong ties to working-class America, has promised a trade policy that will create or protect jobs in the US.
“We will use trade, in coordination with both international and domestic economic instruments, to create more inclusive prosperity for America and Americans,” said Katherine Tai, Biden’s choice to become the US Trade Representative, in a speech last month. to the National Foreign Trade Council.
Biden’s vision, she said, “is to implement a workers-oriented trade policy.”
The new president has promised at least one major change from Trump’s trade stance America above all else: Biden wants to establish relations with key American allies, such as the European Union and Canada, who were baffled and enraged by Trump’s relentless and belligerent rhetoric. and actions.
Eventually.
“The mantra was: no sudden moves” in the trade – and instead focus on fighting the pandemic and providing more economic relief, said William Reinsch, a former US trade official now at the Center for Strategic and International. Studies works.
Consider Trump’s tariffs on foreign steel and aluminum, which he imposed in 2018. Lowering or dropping those loads seems like an easy way to heal wounds.
America’s allies were especially angry at Trump’s dubious justification for the sanctions: By dusting off an underused trade policy tool – Section 232 of the Trade Expansion Act of 1962 – he stated that their aluminum and steel posed a threat to US national security. That was a biting insult to closing allies like Canada, who fought alongside the United States in conflicts from World War I to Afghanistan.
Yet the Biden administration has shown little inclination to act quickly on this matter. During her confirmation hearing, the new trade secretary, Gina Raimondo, dodged a question about the metal tariffs. She told Senator Roy Blunt, R-Mo., Only that she would consider his position that manufacturers in Missouri are hurt by the tariffs and would “consider their needs.”
A coalition of steel companies and workers wants to exert political pressure from the other side and keep tariffs. They sent Biden a letter last month claiming they urgently needed help in an economy weakened by COVID.
“Imposing tariffs is always easier than lifting them,” said Wendy Cutler, a former US trade negotiator who is now vice president at the Asia Society Policy Institute.
Last week, Biden even opted to reintroduce the aluminum tariffs on the United Arab Emirates that Trump had lifted upon his departure. Trump, apparently rewarding the UAE for his attempt to diplomatically recognize Israel, had replaced tariffs with quotas on UAE aluminum.
“Imports from the UAE,” the White House said in a statement, “may still displace domestic production, endangering our national security.”
If the administration finally decides to cut or discontinue metal tariffs, it could offset the impact by setting up a public works program that requires a lot of steel and aluminum. Or it could list the benefits of a Buy American push announced by Biden, whose goal is to channel more federal dollars to support U.S. industries.
On the other hand, instead of forgoing the controversial national security tariffs, the government could consider using them itself – but in a different way: to combat climate change.
In August, Peter Harrell, the new international economic adviser to Biden’s National Security Council, argued that if Congress doesn’t take action, the president could use Section 232 to impose tariffs on products and countries that pollute the air or to invest to block. in projects that pollute the environment.
Trump’s use of the tariffs “has created a clear opening for a future Democratic president to impose comprehensive tariffs and sanctions to combat climate change,” Harrell wrote in Foreign Policy magazine.
The Biden team will also have to decide whether to rethink Trump’s confrontational approach to the WTO, the Geneva-based organization that establishes and enforces global trade rules. By blocking deputies from the WTO’s Supreme Court, the Appellate Body, Trump rendered powerless to resolve disputes.
Biden can use the issue as leverage to convince the WTO to make changes that the US has been calling for for years. These include making it easier for Washington to take cases against other countries for unfair subsidization of their businesses or for dumping products on export markets at artificially low prices.
“You can get something the US has been looking for for a long time: reform,” Lovely said.
Likewise, Biden’s team is likely in no hurry to lift tariffs that Trump has imposed on $ 360 billion in Chinese imports in a dispute over the widespread belief that Beijing is using predatory tactics, including cyber, in its quest to overcome the technological domination of China. to catch up with the United States. US policymakers across the political spectrum are frustrated by what they see as China’s illegal trade practices, oppression of the Uyghur minority, crackdown on dissent in Hong Kong and aggressive territorial claims in the South China Sea. It is unlikely that the administration of Biden will decrease.
Nathan Sheets, who served as the Undersecretary of the Treasury for International Affairs in the Obama administration and is now chief economist at PGIM Fixed Income, said he believes that before Biden’s trade team agrees to lower or cancel Trump’s tariffs, it will is likely to require significant changes in Chinese policy. – changes that can take years, if at all.
“It’s not like (the rates are) a short-term bargaining chip: ‘You give us x, and we’ll give you y,'” Sheets said. “They want to keep the heat on China.”