Can Biden compete with Trump on trade?

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As we gear up for Monday’s Iowa caucus, I’ve been thinking about how the Biden administration is between a rock and a hard place on trade.

As president, Joe Biden needs to worry about inflation and stability, which bolster the case for making nice with China. But he also needs to worry about his longer-term goals of building a “bottom up, middle out” economy that reprioritises American workers and the industrial commons. That argues for a tough approach to China.

It has also resulted in a more conservative approach to any foreign acquisition of a US company in a strategic sector — think about the Nippon Steel bid for US Steel, which Biden’s top economic adviser Lael Brainard recently said deserved “serious scrutiny”. That’s smart politics in an election year, but has allies like Japan, which should presumably benefit from “friendshoring”, scratching their heads, a topic I’ll look at in my column on Monday.

We can debate the right approach. But there’s no doubt that American voters’ discontent over the neoliberal free trade policies under Bill Clinton and Barack Obama — and pretty much all Republicans — are one reason we got Donald Trump the first time round. And it’s clear this topic will be a big part of his campaign this time round too.

Witness Trump’s former US Trade Representative Bob Lighthizer — who would undoubtedly be a key player in any Trump 2.0 administration — on Fox Business recently decrying the Nippon Steel deal. He’s also written a letter to the editor at The Wall Street Journal, telling those laissez-faire weather folks over there that “those who insist on forcing a failed policy of unrestricted free trade on the public, in spite of the disastrous effects it has had on American workers, need to check their hubris”.

The fact that Biden was so pro-labour during the 2020 campaign is what enabled him to best Trump, of course. He’s lived up to his promise to support unions ever since, even joining a United Auto Workers picket line. But being pro-labour and developing a truly fair, pro-labour trade policy — not something jingoistic, like “America First”, but something that really is good for the US and the world — is a tough thing. And messaging it is even tougher. I fear that these two things together will pose a potential challenge for Biden in the 2024 election.

As Swampians will know, I’ve been a fan of Katherine Tai’s “postcolonial” trade paradigm as a way of making sure both people and the planet are prioritised as more than just what neoclassical economists would call “negative externalities”. She correctly views trade policy through the lens of competition policy, seeing Chinese state monopolies and American Big Tech companies as two sides of the same coin. Her strategy is about making sure monopolists — be they states or companies — don’t have undue power. This is why she recently informed the World Trade Organization, for example, that the US wouldn’t support new digital rules that made it tough to regulate American platform giants.

That’s smart, fair, economic policy, and something that workers and US allies — the president’s two biggest priorities — could presumably get behind. But it’s certainly not as easy to message as “America First”.

Alec, my question to you as our foreign editor is, how does the rest of the world see the Biden position on trade? Do allies even understand the differences in the Biden and Trump positions on trade? And how do you expect the global trade picture to play out in the year ahead?

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Alec Russell responds

Very important questions, Rana. I am learning fast in this role though the dangers of generalising about a world view, not least on Donald Trump . . . 

That said, one thing is clear. The warning by Christine Lagarde, the president of the European Central Bank, yesterday that a second Trump term would be “a threat to Europe” reflects the consensual alarm of America’s traditional European allies about the prospect. She specifically cited the trade tariffs of Trump’s presidency as one of three areas during his time in office where “US interests were not aligned with those of Europe”.

Her remarkably frank remarks reflect how sentiment in the EU has shifted somewhat from the idea early in Joe Biden’s presidency that on trade he was in essence a “politer version of Trump”. The loopholes negotiated in the electric vehicle tax credits underlined a sense in the EU that while Biden had moved America further into a protectionist era, there is a structure to his administration’s policies that make them preferable to what often seemed to be the incoherence and unpredictability of Trump’s. The Biden administration was not popular in the EU last year when it tried to persuade it to sign up to its “green steel” cartel. But an accommodation has been reached. 

That said, it is vital to appreciate that there are many countries in the world, and not just autocracies, which are relatively sanguine about the idea of a second Trump term. In Asia and Africa I have encountered officials who were no fans of Trump but who say they will be happy to see the end of what they regard as the lectures by the Biden administration on a host of issues. Some suggest also that they found Trump’s more ad hoc policymaking easier to navigate than the more rigorous and structured systems enshrined under Biden.

As for your last question, on global trade, a key factor here is China of course. You could argue that China is now more pro-free trade than America. Ireland is the only country in the EU that has a trade surplus with China. With the WTO all but moribund, China is busily negotiating free trade agreements to make up for what it sees as a declining global trade system.

As for the bigger picture, it’s early in the year but with the shipping lanes in the Red Sea and the Panama Canal imperilled — for very different reasons — 2024 is not exactly shaping up as a good year for the easy movement of global goods.

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And now a word from our Swampians . . .

In response to “It’s time for Chris Christie to drop out”:
“A vote for Christie is a vote against Trump and is a clear indication of where the voter stands. A vote for Haley is a vote for her to be Trump’s VP.” — Commenter David