Is the Biden administration afraid of trade?
The Biden administration has an international trade problem. It really doesn’t want to deal with trade issues, yet those pesky irritations just keep knocking at the door and demanding attention. Rather than addressing them by seeking market-opening solutions that benefit both buyers and sellers, the administration looks very much like it wants to run and hide — as if it’s afraid of trade.
Trade barriers hurt the economies of countries that use them. Costs to users are substantially greater than benefits to producers, so the overall economy suffers a loss. Our country ends up poorer. This reality has guided presidents of both parties to seek reduced trade barriers around the world, starting with FDR’s presidency in the 1930s and continuing up until 2017.
The Biden administration gives every indication of intending to continue the anti-trade policies of President Donald Trump. Candidate Biden said during the campaign that he didn’t want to rush into new trade agreements until some domestic priorities had been achieved. How determined is the Biden team to go slow on trade? Well, it has allowed Trade Promotion Authority — legislation ensuring Congress actually will vote on a trade agreement — to lapse and has shown no interest in renewing it. Thus, the administration conveniently can tell countries such as the United Kingdom and Kenya, which had been negotiating free-trade agreements with the Trump administration, that there’s no reason to talk at this point because there is no realistic prospect of getting a deal approved.
Joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) also seems too sensitive. Many Democrats opposed the original TPP negotiated by President Barack Obama and celebrated when his successor pulled out of it. So despite lack of a better plan for enhancing U.S. economic engagement in the Asia-Pacific, and despite bipartisan encouragement from Sens. Tom Carper (D-Del.) and John Cornyn (R-Texas) — the chairman and ranking Republican on the Trade subcommittee — the administration remains adrift when it comes to strengthening America’s presence in that fast-growing region. Even the fear of being left behind as China and Taiwan seek membership hasn’t budged the White House.
Candidate Biden was critical of the Trump tariffs. Because they were imposed unilaterally by the previous president, many observers expected Biden would use his executive authority to revoke most or all of them. No such luck. Even the ham-handed tariffs on steel and aluminum have been embraced by the new administration. Those tariffs harm U.S. manufacturers and workers. A pre-pandemic February 2020 analysis by economists Lydia Cox and Kadee Russ found the tariffs might have led to an increase of roughly 1,000 mill workers. However, they cost the jobs of 75,000 people at value-added manufacturers.
These job losses are easy to understand when we realize that the approximately 140,000 steel mill workers are outnumbered 45 to 1 by the 6.7 million employees working in factories that use steel as an input. Companies that make useful things out of steel are stuck paying for the most expensive steel of any major country. Hot-rolled steel now is priced 68 percent above high-cost Western Europe. It’s hard for manufacturers to compete against imported finished products when the government is going out of its way to raise their costs.
An additional consideration is that the steel and aluminum tariffs almost certainly violate America’s WTO obligations. How would we respond, for instance, if Germany implemented tariffs against U.S. steel on the theory that imports from our country harm their national security? We would see it as a bogus excuse. Maintaining these tariffs is a counterintuitive strategy for rebuilding relations with allies.
So, Biden seems happy to embrace Trump’s protectionist policies, but at least he’s not making things worse, right? If only that were the case.
The administration recently floated the idea of imposing additional tariffs on Chinese products to pressure Beijing to change its trade practices. Trump tried this approach but succeeded only in inflicting high costs on Americans while achieving no perceptible policy improvements by keeping the China tariffs in place. It’s as if the White House is saying, “Wow, Trump’s approach was a dismal failure! Let’s try doing more of it!”
Rather than being timid about trade liberalization, Biden should make the case that more-open markets are good for our country and good for the vast majority of Americans. Right now, many countries are expanding trade while the United States dithers on the sidelines. Most U.S. companies are world-class and can compete effectively in the global economy. It’s time to stop being afraid of trade, to get back into the game, and engage confidently with the world.
Dan Pearson, a former chairman of the U.S. International Trade Commission, is a trade policy fellow at Americans for Prosperity.