WASHINGTON—Donald Trump’s election in 2016 led to the biggest shift in U.S. trade policy since World War II, as he piled on tariffs and eschewed alliance-building. A win by Joe Biden could reverse direction again.
The former vice president and Democratic challenger says he will woo allies battered by Trump trade sanctions, rethink the use of tariffs and try to create a united front to confront China.
The incumbent Republican says tariffs are his favorite weapon and he has used them effectively to bend China, Mexico and other nations to America’s will. At a meeting with conservative activists last year, he called tariffs “the greatest negotiating tool in the history of our country.”
The Biden campaign says the president has misused the weapon by acting unilaterally. “Common sense tells us we need more steady and serious uses of leverage than threats and bullying,” says Jake Sullivan, Mr. Biden’s senior policy adviser.
Can’t Avoid China
Mr. Biden wants to de-emphasize trade policy, saying he won’t sign new trade deals until he has given the middle class a substantial lift. But China won’t wait.
As president, he would inherit tariffs on roughly three-quarters of everything China sells to the U.S., plus a Phase One trade deal with ambitious Chinese purchase commitments that he would need to enforce.
Already corporate lobbyists are advising Biden campaign officials that slashing some of the tariffs would encourage China to work with a Biden administration on other priorities, such as climate change or pressuring Iran over nuclear weapons.
Mr. Biden is keeping his options open. He plans to consult with allies on a common approach toward China, said Mr. Sullivan. “Then he would make a determination of the best way to go forward with the leverage we currently have,” he said—meaning a Biden administration might keep tariffs or might roll them back depending on the joint strategy.
But any attempt to eliminate tariffs could meet with opposition among congressional Democrats who are as hawkish on China as their Republican counterparts.
“I’ll work closely with a Biden administration to review the tariffs, one-by-one,” says Oregon Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, which oversees trade policy. “But when you have trade cheats ripping off American workers, you use every tool in the toolbox, including tariffs.”
In one important area, Mr. Biden, congressional Democrats and Mr. Trump are in sync—trying to limit the rise of Chinese technology companies.
They view China’s tech giants as threats to their U.S. rivals—and as vehicles for espionage. In words similar to President Trump’s, Mr. Biden complains of Beijing ripping off American technology.
Should Mr. Trump win re-election, his top officials say, expect him to exert ever-increasing pressure on Beijing. During his four years in office, the U.S.-China trade warmorphed into a technology war and now has reached deeply into areas of national security.
Trade policy remains a favored tool for Mr. Trump to punish Beijing over human-rights and national-security issues. The Commerce Department has placed 300 Chinese companies so far on a blacklist—half of them affiliates of Huawei Technologies Co.—limiting their purchases because of issues ranging from technology theft to espionage to human-rights abuses in Xinjiang province.
Recently, the president raised the prospect of “decoupling” from China—meaning separating the two economies, although he hasn’t said how far he wants to go. Don’t dismiss that as campaign rhetoric, says a senior administration official, who expects a series of meetings and phone calls with the president to hammer out a policy.
John Bolton, Mr. Trump’s former national security adviser, is skeptical that the tough talk and actions will survive the campaign if Chinese leader Xi Jinping expresses interest in a follow-up trade agreement.
Others say Mr. Trump could use a second term to reopen talks toward a new trade deal, which could help ease strained relations between Washington and Beijing.
“Trump has proven able to reverse himself,” says Gary Hufbauer, a trade expert at the free-trade Peterson Institute for International Economics.
Tariffs Here to Stay
The president wasn’t exaggerating in 2018 when he called himself “Tariff Man.” Trade experts say no president since the 1930s has used tariffs as extensively as Mr. Trump.
Even trade deals don’t exempt U.S. trading partners. Despite negotiating a pact with Mexico, Mr. Trump vowed fresh tariffs unless Mexico curbed immigration and, recently, limited exports of strawberries and bell peppers.
A second Trump administration is bound to rely heavily on tariffs. U.S. Trade Representative Robert Lighthizer proposes that the country equalize tariffs with its trading partners across the board. Given that U.S. tariffs are generally lower, that could mean substantial rises.
“The notion that we’re locked into [commitments on tariffs] that says just forever you’re stuck with that imbalance is, to me, crazy,” he told the Senate Finance Committee in June.
Mr. Biden also would use tariffs, but for different ends, especially the environment. He is calling for “carbon adjustment fees”—a fancy term for tariffs—and quotas on imports from nations that don’t meet climate targets.
“Once you take serious action on climate, you have to have a way to deal with other countries that might seek a race to the bottom,” says Mr. Sullivan, the Biden adviser, noting that the concept has supporters in Europe too.
Allies or Adversaries?
Perhaps the biggest difference between a second Trump term and a Biden administration would be trade relations with U.S. allies. Mr. Biden’s advisers say his administration would consult with allies before acting on trade, especially when it comes to China.
“A unilateral approach leaves leverage on the table,” says Mr. Sullivan. “It’s better to be pulling together a range of like-minded economies. That’s how you get real leverage.”
But multilateralism also presents the Biden camp with some tough trade-offs. European countries are bound to demand a lifting of steel tariffs imposed by Mr. Trump and backed by Mr. Biden’s labor allies.
Some trade experts think the former vice president could craft a compromise by scrapping the tariffs but helping the steel industry through new “Buy America” rules that require domestic steel production. A Biden adviser declined to comment on the proposal.
Mr. Biden has also dangled the possibility that he would join a trade pact among 11 Pacific Rim nations, once called the Trans-Pacific Partnership, which Mr. Trump scrapped on his first working day in office. The former vice president said he would renegotiate the agreement first.
“A time-tested Democratic strategy,” says William Reinsch, a former Clinton administration trade official, would be to “declare the existing agreement unsatisfactory, negotiate some minor changes, and declare it fixed.”
Mr. Lighthizer, the president’s top trade adviser, contends the TPP would give China a way to dominate the U.S. automobile market because it would be able to sell auto parts to Japan and other TPP members, which would then ship fully assembled cars to the U.S.
He also pushes back against the idea that the U.S. is a lone wolf on trade, pointing to discussions with the European Union and Japan over a common approach toward China, although that effort has produced few concrete results. “We work with allies, but we don’t let them veto doing things,” he said last year.
The difference in approach plays out at the World Trade Organization, where the Trump administration has crippled the WTO’s ability to referee trade disputes by blocking the appointment of appellate judges.
A Biden adviser says the former vice president would end the blockade, stressing Mr. Biden’s plan to work with allies. The future of the WTO won’t win either presidential contestant many votes, but it is effectively on the ballot in November.
Bob Davis is a senior editor who covers economic issues out of the Washington D.C. bureau, especially those that will play out in the presidential campaign. He also continues to write about China, where he was posted from 2011 to 2014.
Josh Zumbrun is a national economics correspondent for The Wall Street Journal in Washington, D.C. He joined the Journal in 2014 and has covered the U.S. economy since 2008.
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