Four reasons Joe Biden and Donald Trump will not differ much on US trade policy

Developments in Biden’s first 100 days in office suggest a swift return to the pre-Trump status quo of US relations with the rest of the world is unlikely
While the Biden team is conducting a thorough review of Trump’s trade actions, it is clear there will be a high degree of continuity

Stephen Olson

Published: 10:00pm, 14 Apr 2021

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With US President Joe Biden approaching the 100-day mark in office, we have already learned four important things about how trade policy is likely to unfold, at least initially, under the new US administration.

First, former president Donald Trump’s legacy will cast a wide shadow. Trump’s norm-busting presidency, and in particular his proclivity to run roughshod over traditional alliances and marginalise global institutions, spurred conjecture on whether US relations with the rest of the world would snap back to normal once Trump was no longer in office.

Based on Biden’s first 100 days, the short answer appears to be “no”. European partners, for instance, appear less willing to rally around reasserted US leadership in trade. This was evident even before Biden took office, when the European Union decided to move forward on its investment agreement with China despite entreaties from the incoming Biden team to hold off until a more unified approach to China could jointly be developed.

This was a sharp departure from the EU’s usual preference to coordinate closely with the US. Even Japan, one of the most stalwart US allies, has been uncharacteristically resistant to encouragement from Washington to join in imposing sanctions in response to the situation in Xinjiang.

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The reluctance of traditional partners to follow the US lead reflects a sober assessment that, far from being a historical aberration, Trumpism and perhaps Trump himself could return to the White House as early as 2024. According to this perspective, why reinvest in US leadership when the rug could be pulled out again in a few short years?

This scepticism about the US has begun to undermine Biden’s ability to galvanise coordinated trade action as the US has done in the past.

Second, there will be no revival of big trade deals, but sectoral agreements are likely.

Trump withdrew the US from the Trans-Pacific Partnership (TPP), which was negotiated but not approved under the Obama administration. He is therefore either credited or faulted, depending on one’s perspective, with killing the TPP.

In reality, Hillary Clinton, his opponent in 2016, was also opposed to the TPP, meaning the demise of the agreement was a foregone conclusion. As secretary of state, Clinton was initially a vociferous promoter of the TPP.

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Her reversal demonstrates how steeply the appeal of free trade deals has declined in Washington.

Biden’s tepid enthusiasm for big trade deals is clear. The new administration’s 2021 Trade Policy Agenda, reported to Congress last month, did not call for an extension of Trade Promotion Authority (TPA), which is scheduled to expire in July. TPA provides for a straight up-or-down vote in Congress on trade deals and is generally regarded as a prerequisite for securing passage of any full-scale free trade agreement.

Biden’s ambivalence towards TPA renewal is a telling gauge of his lack of interest in pursuing trade deals. A rapid return to the reformulated Comprehensive and Progressive Agreement for Trans-Pacific Partnership or a quick trade agreement with Britain are therefore unlikely to happen.

The absence of big, full-blown free trade agreements does not mean trade negotiators will be idle, though. Smaller, sectoral deals aimed at addressing specific areas of concern are likely.

The US and Japan will reportedly pursue an agreement on semiconductor supply chains. Expect to see the sectoral model repeated, with digital trade likely to be a top priority.

Third, there will be a fair amount of continuity. One aspect of Trump’s trade legacy the Biden administration is embracing is the use of tariffs and the imposition of technology restrictions designed to blunt China’s pursuit of technological superiority through the use of predatory tactics.

In her first major media interview, Biden’s trade representative Katherine Tai expressed comfort with maintaining the Trump tariffs, saying “no negotiator walks away from leverage”. When questioned about her view on the global steel and aluminium tariffs applied under Trump, Commerce Secretary Gina Raimondo said “those tariffs have worked”.

Raimondo had previously stated her desire to maintain Trump administration restrictions on Huawei Technologies Co., and more recently she said the Commerce Department had added seven Chinese supercomputing companies to the restrictive “entities list”.

These moves represent a tacit endorsement of some of the most consequential policies pursued by the previous administration. While the Biden team is conducting a thorough review of Trump’s trade actions, it is clear there will be a high degree of continuity.

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Fourth, do not expect rapid rapprochement with China. The pre-election judgment of US intelligence services was that Beijing preferred a Biden victory, anticipating that the Democratic challenger would pursue a less hardline stance.

However, the fireworks at the start of the bilateral meeting in Alaska illustrated that Biden is comfortable with Trump’s confrontational approach and perhaps intends to turn up the heat on China’s human rights practices, opening up an entirely new front in the trade war.

Presidential policy agendas laid out during the first 100 days in office frequently look far different by the end of the term, owing to the intrusion of unforeseen events, changed political fortunes after midterm Congressional elections and the success or failure of initial priorities.

Based on what we have seen thus far, here is what we can expect in trade policy in the next 12 to 18 months: a fair amount of continuity with the previous administration, especially regarding China, tariffs and tech policy; no major new trade deals; and an improved cooperative relationship with the EU and Asian allies, but one which falls considerably short of the hoped-for united front as traditional partners view the US with far more sceptical eyes.

Stephen Olson is a senior research fellow at the Hinrich Foundation