WASHINGTON (AP) – In his first weeks in office, President Joe Biden wasted no time in getting rid of a number of important Trump administration policies. He joined the Paris climate agreement again. He ended the ban on travelers from mainly Muslim countries. He canceled the Keystone XL pipeline. He reversed the ban on transsexuals serving in the armed forces. And so on.
Biden and his team are on their toes, however, around one of Donald Trump’s most divisive legacies: his autonomous moves to start a trade war with China and strike some of America’s closest allies with a tariff storm on steel and aluminum and other goods. In raising seven decades of presidential support for free trade, Trump promised to reduce the U.S. trade deficit and restore millions of American jobs lost in factories.
Ultimately, in most accounts, Trump tariffs have achieved very little – and have managed to antagonize some of America’s closest trading partners.
However, for the time being, the Biden government appears to intend to approach trade with caution and deliberation. Most impressive, perhaps, is what Biden did not: he did not cancel Trump’s trade war with China. He did not promise to reduce or cancel his tariffs on imported metals or end an impasse that left the World Trade Organization unable to function as an arbiter in global trade disputes.
Instead, government lawmakers are focusing on other unrelated priorities – distributing COVID-19 vaccines as quickly as possible and providing much more aid to a pandemic-stricken economy that has not yet recovered nearly 10 million jobs lost since February .
“It will take time,” said Mary Lovely, an economist at Syracuse University who is a senior research fellow at the Peterson Institute for International Economics. “Biden has said repeatedly that he needs America to be stronger before he takes on many of these trade problems. ”
One factor may be that the reversal of all Trump policies may increase the risks for a Democrat who is close to unions dissatisfied with the pre-Trump American free trade consensus. Politically, Biden depends on support from the Midwest’s manufacturing towns and villages. These areas suffered from low-priced imports from China, Mexico and elsewhere.
“There is competition for voters from undecided states who are in favor of (commercial) protection,” said Daniel Ikenson, director of trade policy studies at the libertarian Cato Institute.
Democrats are still hurt by Trump’s surprise victory in 2016 and some of the trade-related factors behind it. Trump abandoned the support of the modern Republican Party to free trade agreements favored by American corporations with deep connections abroad. Instead, Trump presented himself as a populist defender of suffering industrial workers – a “first in America” champion who would eradicate unfair business practices and restore jobs in American factories.
For Democrats, Trump’s victory in 2016, due in large part to blue-collar voters, provided “a harsh lesson about the dangers of a trade policy that does not think about workers, but (in benefiting) finance and agribusiness” said Lori Wallach, director of Global Trade Watch at Public Citizen.
Aware of this lesson, Biden’s team, led by a president who is rarely tired of asserting his lasting ties to the American working class, promised a trade policy that will create or protect jobs in the United States.
“We will use trade, in coordination with international and domestic economic tools, to create a more inclusive prosperity for the United States and the Americans,” said Katherine Tai, chosen by Biden to be the US trade representative, in a speech last month to the National Foreign Trade Council.
Biden’s vision, she said, “is to implement a worker-centered trade policy.”
The new president promised at least one significant change in Trump’s commercial posture of America above all: Biden wants to repair relations with the main US allies, such as the European Union and Canada, who were perplexed and infuriated by the mercurial rhetoric and belligerent Trump and stocks.
Eventually, anyway.
“The mantra has been: no sudden movement” in trade – and instead focus on fighting the pandemic and delivering more economic relief, said William Reinsch, a former US trade official who now works in the Center for Strategic and International Studies.
Consider Trump’s tariffs on foreign steel and aluminum, which he imposed in 2018. Reducing or removing these taxes seems like an easy way to heal wounds.
America’s allies were especially irritated by Trump’s dubious justification for sanctions: Dusting a little-used trade policy tool – Section 232 of the 1962 Trade Expansion Act – he declared that aluminum and steel constituted a threat to US national security. It was a poignant insult to close allies like Canada, which fought alongside the United States in World War I conflicts with Afghanistan.
Still, the Biden government has shown little inclination to act quickly on the matter. At the confirmation hearing, the new secretary of Commerce, Gina Raimondo, dodged a question about metal tariffs. She told Sen. Roy Blunt, R-Mo., Only that she would take into account her point that Missouri manufacturers were hurt by the tariffs and “would take their needs into account.”
By exerting political pressure on the other side, a coalition of steel companies and workers wants to preserve tariffs. They sent a letter to Biden last month arguing that they need urgent help in an economy weakened by COVID.
“Imposing tariffs is always easier than suspending them,” said Wendy Cutler, a former United States trade negotiator who is now vice president of the Asia Society Policy Institute.
Biden even decided last week to reinstate aluminum tariffs in the UAE that Trump suspended when he stepped down. Trump, apparently rewarding the United Arab Emirates for his initiative to recognize Israel diplomatically, replaced the tariffs with aluminum quotas from the United Arab Emirates.
“Imports from the United Arab Emirates,” said the White House in a statement, “can still displace domestic production and thus threaten to damage our national security.”
If the government eventually decides to reduce or end metal tariffs, it can offset the impact by enacting a public works program that requires a lot of steel and aluminum. Or it could tout the benefits of a Buy American initiative that Biden announced, which aims to channel more federal dollars to support American industries.
Then again, far from abandoning contentious national security tariffs, the government can only consider using them – but in a different way: to combat climate change.
In August, Peter Harrell, the new international economic adviser to the Biden National Security Council, argued that if Congress fails to act on the issue, the president could use Section 232 to impose tariffs on products and countries that pollute the air or to block investments in projects that harm the environment.
Trump’s use of tariffs “created a clear opening for a future Democratic president to impose comprehensive tariffs and sanctions to combat climate change,” wrote Harrell in the Foreign Policy newspaper.
Biden’s team will also have to decide whether to rethink Trump’s confrontational approach to the WTO, the Geneva-based organization that defines and applies global trade rules. By blocking substitutions in the WTO’s highest court, the Appellate Body, Trump made him powerless to settle disputes.
Biden can use the issue as a lever to persuade the WTO to approve the changes the United States has been demanding for years. This includes making it easier for Washington to sue other countries for unfairly subsidizing their companies or dumping products on export markets at artificially low prices.
“You can achieve something that the United States has long sought: reforms,” said Lovely.
Likewise, Biden’s team is probably in no hurry to suspend the tariffs Trump has imposed on $ 360 billion in Chinese imports in a dispute over the widespread belief that Beijing uses predatory tactics, including cyber theft, in its attempt to overcome the technological domain of the United States. US lawmakers across the political spectrum are frustrated with what they see as China’s illicit business practices, the crackdown on the Uighur minority, the crackdown on dissidents in Hong Kong and the aggressive territorial claims in the South China Sea. The Biden government is unlikely to budge.
Nathan Sheets, who served as undersecretary of the Treasury for international affairs in the Obama administration and is now chief economist at PGIM Fixed Income, said he thinks that before Biden’s commercial team agrees to reduce or cancel Trump’s tariffs, it will likely require radical changes in Chinese politics – changes that could take years, if at all.
“It’s not like (the tariffs are) a short-term currency: ‘You give us x, and we will give you y,'” Sheets said. “They want to keep the pressure on China.”