Observers Speculate on Trade Policy in Potential Biden Administration
While many expect a President Joe Biden to be less protectionist than President Donald Trump, Michael Smart, a managing director at Rock Creek Global Advisors and former international trade counsel for Democrats on the Senate Finance Committee, wasn't ready to say that Biden would roll back tariffs on either China or Europe, though he did say that Biden wouldn't “go after the European Union” as Trump has. He said that a Trump or a Biden administration would have the same focus on expanding Buy American rules, which cover government procurement.
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Scott Lincicome, a senior fellow on international law at the libertarian Cato Institute, said that Democrats -- including Biden -- say on the campaign trail that Trump's trade war has failed. “They talk about the tariffs not working, but they don’t go the next step and say we’re going to do away with them,” he said during a Flexport webinar Aug. 19. “I think the Democrats are going to try to play footsie with Trump's trade war,” he said, but thinks that at some point before the election, they may have to take a stand. He said that in the end, “I don’t see those [China] tariffs going away.”
The two men also talked about whether Congress's influence in trade would grow -- and they don't think so, unless the administration wants to pass trade promotion authority or a trade deal. And even then, moderator and Flexport economist Phil Levy noted, the current administration feels free to work counter to powerful players' interests once the vote is done. He said Senate Finance Committee Chairman Chuck Grassley, R-Iowa, insisted that tariffs on Canadian and Mexican steel and aluminum be lifted before a USMCA vote was taken, but now some tariffs on Canadian aluminum are back.
Smart and Lincicome agreed that a Democratic Congress would like USMCA to be a template for future trade deals. But Smart said that if a Biden administration negotiated something like it, with what he called “a very intrusive labor inspection,” and a strict rule of origin for autos, he wonders if Republicans would vote for it. “It crossed so many Republican red lines,” he said, including the wage provision in autos and the elimination of investor protections. “The politics of this were just scrambled,” he said.
Lincicome said he doesn't think it would come to that, because he doesn't think developing countries would agree to the terms that Mexico did. “It worked in the USMCA largely because NAFTA already existed,” he said. “The Democrats got an amazing deal. They certainly will be pushing that in the future. I just don’t know who’s going to be a receptive party on the other side of the table.”
The panelists also speculated on who Biden should appoint as U.S. trade representative, if he wins the election. Smart said he'd prefer a politician who's close to the president and who has deal-making skills to a trade hand. “I would look at maybe a member of Congress who’s got those political connections and some experience on trade policy,” he said. “I think that’s right,” Lincicome said of Smart's argument. “It’s better to have a politician, a schmoozer at the top, than a technician. I think we’ve seen that in the last decade.”
Lincicome said he's hoping the nominee would be at least “somewhat pro-trade,” and offered Xavier Becerra, a former congressman and current California attorney general. He joked that his endorsement probably ruined Becerra's chances, and added, “I have no idea if he’s interested.”