Charting a New Path in Global Trade: Eight Views from News Sources, Consulting Firms, Law Firms and Think Tanks Regarding President Biden’s Trade Policy Agenda
On the balance, there seems to be a consensus that the Biden administration’s trade policy will continue to put the United States first and remain tough on China. Various organizations note Biden’s willingness to use tariffs as needed, leave intact many of the Section 301 and Section 232 duties, give preferential treatment to U.S. goods and manufacturers, and heavily invest in the U.S. economy. This is not to say, however, that the Biden administration’s trade policy will be a carbon copy of Trump’s. Many expect that Biden will reforge key U.S. alliances in approaching these issues in addition to renewing participation in the WTO and other institutions. Also, labor and environmental concerns will be of greater importance when negotiating trade deals and setting new rules. Consequently, observers should not anticipate a dramatic shift in U.S. trade objectives under the Biden administration; rather, they will most likely see a change in the U.S.’s playbook when it comes to navigating the international trade landscape.
NBC predicts an overall shift in trade policy as the Biden administration steps in. However, the shift is not likely to be as dramatic as some might think. The Biden administration is expected to employ a different approach in addressing the trade war with China that, while still aggressive, will offer more stability compared to that of the Trump administration. This more stable approach will lean on multilateral alliances to bring supply chains back to the United States. It also “promises to invest $400 billion in procurement measures to boost domestic manufacturing and to pour $300 billion into research and development.” Additionally, the administration will still use tariffs, but only when “backed by strategy and a plan.” Some see the Biden administration as a shift back to the old ideals of free trade. However, Michael McAdoo, a partner with Boston Consulting Group, says this will not be an overnight shift. “There may be selective relief in certain categories,” McAdoo said, “but I wouldn’t suggest day one there will be a magic wand, and all this goes away.”
The Boston Consulting Group does not expect a dramatic shift in trade policy under President Biden, but it does expect the U.S. to reestablish itself as a leader in the global trading community through collaboration with its allies. BCG makes clear that economic nationalism will still be a high priority within the new administration. This is embodied in Biden’s plan “Making it in America,” which focuses on reshoring manufacturing and further easing dependencies on China with a specific emphasis on high-tech products. The administration is not predicted to enter into any new bilateral agreements, as investment at home will be prioritized before new trade. Biden is expected to utilize tax incentives, subsidies, and increased levels of government purchasing, in addition to tariffs, to bring back supply chains to the U.S. Overall, the new administration’s three main objectives are boosting U.S. manufacturing competitiveness and easing the nation’s reliance on imports for critical products, restoring global U.S. leadership by rebuilding alliances and working through multilateral institutions, and taking strong action on U.S. climate change, without putting domestic industries at a competitive disadvantage.
Customs and International Trade Law
The Biden administration is predicted to move away from several of the aggressive, nationalist trade tactics employed by the previous administration. Customs and International Trade Law does not believe, however, the new administration will be a continuation of President Obama’s trade policies, and it argues it will be heavily focused on the issues of wealth inequality, climate change, and labor rights. Nevertheless, the one area which may return to a pre-Trump era is improved U.S. trade relations with ally countries. Regarding China, the expectation is Biden will continue to prioritize leveling the playing field with China by directly combating Chinese trade practices such as state subsidies, surplus production and dumping, currency manipulation, weak IP protection and forced technology transfers, and human rights issues. As far as Section 301 tariffs are concerned, no immediate repeal is expected, but their repeal may be utilized to combat the need for stimulus due to the effects COVID-19. Furthermore, many believe Biden will work to reform the WTO as opposed to walking away from the institution. Finally, it is not likely the Biden administration will take immediate action to change or remove the Section 232 duties; rather, a “significant ‘loosening up’ of the exclusion process and eventual removal are to be expected.”
Foreign Policy believes mending trade relations will not be at the top of the new administration’s list, as it speculates a substantial focus on domestic investment will take priority over new trade agreements. As a result, it is concerned that the landscape of international trade will stagnate or continue to deteriorate while the U.S. gets its internal affairs in order. This anxiety is rooted in the Biden administration’s willingness to entertain protectionist trade practices, preferential treatment for U.S.-made goods, subsidies to domestic industries, and a ban on foreign companies from government procurement. This leaves open the potential for further retaliation from other countries, especially in light of the ongoing trade war with China.
President Joe Biden has emphasized a bilateral approach to trade policy that addresses domestic issues bearing upon trade in addition to the traditional focus on international relations. Specifically, he seeks to better prepare Americans to participate in the global economy; this will minimize the harmful effects of trade that have historically plagued middle-class Americans. The cornerstone of Biden’s domestic trade policy is investment in infrastructure and education. Additionally, Biden has pledged to refrain from entering into any new trade deals until sufficient domestic investment is achieved. This is not to say, however, he will disregard trade deals. In fact, Biden views trade deals as an important tool for the U.S. and its allies to establish the rules of international trade, he and would particularly like a greater focus on labor and the environment in new trade deals going forward.
Overall, the Wall Street Journal predicts the Biden administration will have a more favorable view of globalization and free trade, albeit with some nuances. This is due largely to the fact Biden’s economic picks worked under presidential administrations in the pre-Trump era in which a wide-spread consensus existed in favor of globalization and free trade, but they nevertheless recognize that not all Americans have benefitted from these policies. Accordingly, the Biden administration plans to implement programs that will help Americans hurt by trade and will prioritize domestic issues over new trade deals. The Biden administration will differ from the Trump administration, however, in its belief in a multilateral approach to containing China and a more restrained use of tariffs. Nevertheless, it will maintain pressure on China to reform policies harmful to U.S. interests, such as government support of state-owned enterprises, forced technology transfers, and restricted market access.
Pillsbury Law finds more similarities than differences between the Trump and Biden administrations’ trade policy agendas. The most salient example is China. To date, the Biden administration has not made a unilateral commitment to rescind tariffs and barriers to trade with China; it will instead use tariffs as needed to address continued violations of trade rules. Like the Trump administration, the Biden administration will continue to put pressure on China to cease forced technology transfers, cyber espionage, market access limitations, and state support for businesses. It plans to rely more heavily on U.S. allies to achieve these goals. The Biden administration also wants to investigate supply chains and eliminate or reduce any dependencies posing a risk to national security, especially in the pharmaceutical and medical industries, energy and grid technologies, semiconductors, electronic and telecom equipment, and critical raw materials, through the use of tax benefits and subsidies. Finally, the Biden administration has committed to expanding “Buy American” requirements and reforming the WTO.
Arent Fox believes that the Biden administration will seek to distance itself from the Trump administration in terms of trade policy and work to repair the damage that it believes the Trump administration has caused to the global trade regime. Accordingly, it expects the Biden administration to strengthen relationships with U.S. allies, re-engage with the WTO, push for greater environmental protections and workers’ rights in a renewed Trade Promotion Authority, and potentially enter into a renegotiated TPP. A less protectionist trade policy, however, squarely conflicts with the Biden administration’s declared commitment to expanded “Buy American” procurement policies, which is a hurdle it must overcome. Furthermore, while the Biden administration plans to approach China relations differently than the Trump administration, Arent Fox nevertheless predicts it will leave many of the pre-existing tariffs intact. As a result, the Biden administration likely will chart its own path in some areas of trade policy while finding its hands tied in others.
Lane Haskell is a second-year law student at the University of Nebraska-Lincoln College of Law. One of the inaugural members of the Global Trade and Business Think Tank, he is currently one of the club’s co-presidents and editors in addition to serving as a member of the Nebraska Law Review. Lane is from Rapid City, South Dakota and intends to pursue a career in international business and trade following law school.
Jackie Newland is a third-year law student at the University of Nebraska-Lincoln College of Law with a specialization in International Trade and Business. She is one of the inaugural members and current Co-President/Editor of the Global Trade and Business Think Tank. She is from Neodesha, Kansas and plans to return to her home state after graduation to work as Associate Counsel for the Kansas Livestock Association.