×

Welcome to National Journal!

Enjoy this premium "unlocked" content until July 24, 2021.

Continue

Biden is first modern Democratic president to recant the free-trade gospel

He has yet to break fully with Trump's protectionism. And final decisions will likely have to wait, because a full-scale shift on tariff policy could split the Democratic coalition.

A train carries steel slabs at the Krupp Mannesmann steel factory in Duisburg, Germany.
ASSOCIATED PRESS
July 11, 2021, 8 p.m.

Six months into his term, President Biden has shed little light on the details of his trade policy, leaving most major decisions on trade negotiations and enforcement for later in his presidency. But he has shown enough to leave no doubt that the durable, six-decade era in which the dogma of free trade reigned almost unchallenged is over. President Trump’s aggressive promotion of protectionism and rejection of free trade turns out to be less a four-year anomaly and more a sign of a return to the trade battles that dominated American politics in the century before World War II.

Biden is not the ardent protectionist Trump was. But neither is he the gung-ho champion of free trade that the 12 presidents from Harry Truman to Barack Obama were. From GATT to WTO and from NAFTA to TPP, those presidents recited the alphabet of expanded trade and promised the benefits would flow to all Americans. Often, they did it with the support of Biden when he was in the Senate and then as vice president. But not always. A reliable vote until 2000, he took a sharp turn in 2002, voting against five trade deals before leaving the Senate and returning to the free-trade camp to support Obama.

Now, Biden is charting his own path. So far, he has taken only a few halting steps along that path, but they indicate a skepticism that the benefits from past deals have reached the Americans he knew growing up in Scranton.

“After the second world war, everybody was a free trader because free trade benefited every sector of the U.S. economy because all the other countries were flat on their backs,” said William A. Galston, who was President Clinton’s chief domestic adviser. “No longer.” He said everybody was aligned “because everybody’s ox got fat and nobody’s ox got gored. We don’t live in that world anymore.”

Galston dated the shift both for the country and for Biden to President George W. Bush’s decision in 2000 to permit China to become a full member of the World Trade Organization. “It was 20 years ago that elites in both parties cheered China’s succession to the WTO. And the perception that started at the grassroots level finally made it to the elite level in just the past few years that that decision hasn’t worked out very well.”

Instead of reshaping China’s behavior, he said, it has cost “millions of workers their jobs” and accelerated China’s ability to build up its economy, military, and diplomatic reach. “The fact that the United States lost millions of manufacturing jobs in the six years between China’s entrance in the WTO and the start of the Great Recession … created a huge change in attitudes,” said Galston. “It started at the bottom and it took its sweet time getting to the top. Biden inherited that change and he is not free to disregard it.”

Unexpectedly, the United States has returned to the debate over tariffs that raged for more than a century but had largely subsided. “Once again, we have that debate, but with a difference,” said Galston. “The argument back in the 19th century was protecting infant industries. Now, we are protecting senescent industries. But the arguments are the same.”

In the early months of his presidency, Biden has gone slow on trade—much to the frustration of allies who hoped for an early reversal of Trump’s punitive tariffs and raging protectionism.

“Every time you ask a specific question, what you hear is, ‘Well, that’s under review’,” said William A. Reinsch, who was deeply involved in the debate during his 15 years as president of the National Foreign Trade Council. “China policy is ‘under review.’ Are we going to continue the UK trade negotiations? That’s ‘under review.’ Are we going to continue the negotiations with Kenya? That’s ‘under review.’ What about TPA renewal? That’s ‘under review’.”

Administration officials, he said, “talk big picture. But when it comes to putting meat on the bones, there is not yet much there.” So far, Biden’s biggest accomplishment has been settling the 17-year-old dispute with the European Union over subsidies to Boeing and Airbus, permitting both sides to suspend punishing tariffs. The truce, achieved by Biden’s U.S. Trade Representative Katherine Tai and announced last month, is part of the president’s hopes to enlist Europe as more of an ally against China on trade.

The allies have been reluctant to fall in line, aware that the China market dwarfs America’s. NATO allies also are irked at the president’s frequent espousal of tightening the rules requiring the government to “buy American.” His most public pitch came during his address to Congress in April when he declared that his program “will be guided by one principle: Buy American.” When the applause died down, he quickly added, “And I might note, parenthetically, that does not violate any trade agreement.”

“He said that a lot in the campaign,” said Galston, who is now at the Brookings Institution. “Part of me thought it was just campaign rhetoric. But I was wrong about that. Biden is a politician unusually driven by his heart and he really empathizes with the plight of people who have been forced down the economic scale by the decline of traditional manufacturing, which he grew up with and understands viscerally.”

Reinsch also has seen this in his talks with Biden trade officials. “He means it. And his team means it. I’ve talked to them about this at length.” After years of succeeding administrations routinely granting exceptions to the Buy American rules, he expects fewer waivers. “They really intend to put some teeth into it.”

The pressure for Biden to do more is obvious. Allied leaders in Canada and Europe have pushed Biden to quickly lift Trump-imposed tariffs on steel, lumber, and aluminum. Last week, the International Monetary Fund called on him to end all of Trump’s tariffs, voicing “significant concern … that many of the trade distortions introduced over the past four years remain in place.”

The White House is standing firm on its timetable, though. “We’re continuing to review,” Press Secretary Jen Psaki said of the IMF statement. She said the president “is working every day to work with countries around the world to communicate what our agenda is.” She added that his top priority is a to “make sure we are making decisions through the prism of what’s going to help the middle class here in the United States.”

That makes lifting the Trump tariffs anything but easy politically. “It’s very difficult for an administration to come in and just lift restrictions that in the short term are working to the advantage of the very people you claim to represent,” said Galston. “The administration has a political problem and it has so many other front-burner problems. What is the incentive to rush into controversial trade decisions? I would say close to zero at this point.”

Still, Reinsch is pushing for more. Now at the Center for Strategic and International Studies, he remains optimistic both about the chances to sell free trade and about Biden’s openness to new deals opening foreign markets to U.S. goods. “Globalization hasn’t run out of gas, but it has slowed down. The low-hanging fruit has been picked,” he said. “The current emphasis in this administration is much more on how the benefits of trade are distributed and whether the corporations are getting all the money and whether the workers are getting their fair share. Historically, a free trade philosophy is let’s use trade policy to create more benefits.”

He believes Biden “hasn’t abandoned” trade agreements. “But he is focused on domestic issues. He said he was going to do that. We knew before the election that this was going to be a year of COVID recovery and economic recovery and infrastructure. And—surprise, surprise—he’s a politician who meant what he said.”

Political realities in Congress suggest the White House is unlikely to alter its cautious course on trade. “It is pretty clear they believe that most of their agenda will have to rely on a united Democratic Party,” said Galston.

Trade shatters that unity without attracting significant Republican votes. To overcome the strong grassroots skepticism about trade, the White House believes the president needs a roaring economy to give him the economic and political space to act more boldly. That day is unlikely to come in his first year in office.

Welcome to National Journal!

Enjoy this featured content until July 24, 2021. Interested in exploring more
content and tools available to members and subscribers?

×