Trading Thoughts: What the Election Means for U.S. Trade Policy

May is recognized as World Trade Month, when the trade community celebrates the many benefits international trade brings to the economy. As such, it is worth reflecting on where U.S. trade policy stands today and how the upcoming election might influence its direction. 

Recent trade trends in the U.S. have departed from what are considered traditional free trade principles that prioritize globalization and tariff liberalization. Rather, economic security and competitiveness have moved to the forefront of the policy agenda. 

Lawmakers have been taking a more protectionist posture on trade and industrial policy, favoring domestic production and aiming to diversify and secure global supply chains. Underlying all of this is an increasing hawkishness toward China on both sides of the aisle, where bipartisan proposals to combat unfair trade practices, mitigate security risks posed by the widespread adoption of Chinese technology, and reduce economic dependence abound. 

If elected in November, Trump’s trade policy would sustain a populist, protectionist approach as he continues his “America First” agenda in support of reshoring manufacturing jobs, sometimes at the expense of close allies and trading partners. This is evident in one of his campaign proposals to impose a 10 percent universal tariff on all imports, regardless of origin. The former President will likely continue to use trade policy as leverage to extract concessions from other countries for economic or other policy reasons. 

Trump and his former trade representative, Robert Lighthizer, have floated the idea of weakening the dollar to make U.S. exports more attractive, potentially driving down the trade deficit. To achieve this, they could press other countries—using the threat of tariffs or other tools—to alter their own currency values. Currency devaluation would be a sweeping policy action that could have widespread economic and security consequences. A Trump White House could also mark the return of more traditional trade deals, which President Biden has avoided throughout his term, once again using tariffs or other measures to bring trading partners to the negotiating table.

At its core, Trump’s trade policy will continue to focus heavily on the U.S.-China economic competition and reducing bilateral trade deficits; he has already threatened increasing tariffs as high as 100 percent on Chinese goods—and 200 percent on Chinese electric vehicles—if elected. 

If reelected, President Biden will continue to use trade tools to expand industrial policy, support clean energy goals, promote a worker-centered agenda, and reduce dependence on China. Notably, his Administration recently announced a White House Climate & Trade Task Force, with the aim of developing a holistic approach to develop domestic and international policies to address issues at the nexus of trade and climate. This is all but certain to underpin second term policy for Biden as he seeks to achieve ambitious climate goals, revive domestic manufacturing, and manage tensions with China. 

A second Biden administration will also continue to build economic alliances with allies, which has been a key focus during the first term. For example, Biden sought to ease trade tensions with the European Union (EU) over the Trump-era Section 232 tariffs by developing a vision for a Global Arrangement on Sustainable Steel and Aluminum. The cozier relationship also paved the way for U.S.-EU cooperation on Russia sanctions. Despite a complete departure from traditional trade deals, Biden has sought to increase U.S. influence in the Indo-Pacific through the Indo-Pacific Economic Framework. 

He has also actively tried to manage the relationship with China while still pressuring the nation to address its unfair and market-distorting trade practices. He recently increased Section 301 tariffs on goods from China identified as strategic to levels between 25 and 100 percent. In response to the U.S. announcement, China has suggested it will take steps to defend its interests, though the scale of any potential retaliation is unclear. 

The Section 301 tariffs on Chinese products, which were one of Trump’s signature trade actions, demonstrate the underlying similarities between the two presidential contenders. Biden emphasizes his worker-centered trade policy, while Trump touts his America First agenda. But both have seemingly identical end goals: revitalize U.S. manufacturing and reduce economic reliance on China. How they achieve those goals, however, will be what sets them apart.