Trump the Mercantilist, Biden the Protectionist
How did the Biden administration‘s approach differ from Trump‘s on trade?
The Trump administration is actively trying to promote exports through agreements that are aimed at opening markets for US companies, thus ensuring greater market access.
Biden‘s team, meanwhile, tried to avoid trade altogether. His administration raised existing barriers with no attempt to use them as leverage for greater liberalization, Biden also didn’t reach any substantial economic agreements with major US trade partners and certainly none that focused on increasing levels of market access. Biden‘s administration essentially outsourced trade policy to unions who’re foolishly opposed to import competition - to the detriment of American workers - and to progressive advocates who don’t want to promote US business interests abroad though they‘re very keen on forcing other nations to accept their misguided notions of appropriate labor, environmental or social standards.
The Trump administration is working to completely eliminate tariff barriers from major US trade partners, to liberalize quantitative restrictions i.e import quotas or TRQs on US export volumes and to reduce non-tariff barriers on US goods, services, data and intellectual property.
These are precisely the right goals and they also happen to be the bedrock of actual US Free Trade Agreements.
Generally speaking, the agreements currently being negotiated by the administration are both predatory and harmful to the world economy. They increase baseline tariff rates regardless of the concessions that are provided to the US. The US isn’t offering much in return for the concessions. No greater market access to the American economy, no reduction in pre-2025 tariff rates, no liberalization of US non-tariff barriers to foreign goods and services. This is in part because they‘re merely (constitutionally dubious) executive agreements and any real FTA would require Congressional input and Senate ratification.
The new baseline tariffs, ranging from 10-20% on most of the major economies are being paid by US consumers and US businesses. The next administration should naturally reduce them to zero in return for additional efforts by US trade partners to address outstanding trade irritants. Some of the agreements also include zero-for-zero tariff reductions which ought to be drastically expanded in scope over time to cover an ever greater share of US imports and exports as more non-tariff barriers are simultaneously simplified or eliminated in the process. Remaining US sectoral tariffs on steel, aluminium and copper have to be eliminated as well.
Furthermore, any barter agreements that promise certain non-governmental purchases are not market-compatible and shouldn’t have been included in the first place. The US has an interest in promoting the expansion and further privatization of market economies. Any democratic government of a market economy, however, cannot enter into binding agreements on behalf of its private companies to purchase a certain amount of US products over a certain period of time. That‘s what socialist governments can dictate to their state-owned enterprises.
Having said that, the general quest to draw in more foreign investments is laudable. It contrasts with Biden‘s approach of tightening inward investment controls. Trump‘s already demonstrated that he‘s not seeking to limit foreign investment by walking back Biden‘s decision to block the Nippon Steel deal.
Another area of progress is the relaxation of Biden-era controls on tech exports (especially AI related semiconductors). These export controls were evidently self-defeating and undermined both US economic and strategic interests.
It should go without saying, that all these provisional framework agreements are not based on the principle of reciprocity, which President Trump likes to invoke. They‘re inherently asymmetrical. The US would equally benefit from more symmetrical agreements because any US opening and trade liberalization would increase US competitiveness, naturally attract more foreign direct and portfolio investments, encourage productivity gains and innovation, lower prices, increase product variety and quality while improving the US‘s geo-economic leverage over the rest of the world. Any reciprocal agreement would also be more sustainable because it would neuter the domestic political opposition against the agreements among US trade partners.
The Trump administration is actively trying to promote exports through agreements that are aimed at opening markets for US companies, thus ensuring greater market access.
Biden‘s team, meanwhile, tried to avoid trade altogether. His administration raised existing barriers with no attempt to use them as leverage for greater liberalization, Biden also didn’t reach any substantial economic agreements with major US trade partners and certainly none that focused on increasing levels of market access. Biden‘s administration essentially outsourced trade policy to unions who’re foolishly opposed to import competition - to the detriment of American workers - and to progressive advocates who don’t want to promote US business interests abroad though they‘re very keen on forcing other nations to accept their misguided notions of appropriate labor, environmental or social standards.
The Trump administration is working to completely eliminate tariff barriers from major US trade partners, to liberalize quantitative restrictions i.e import quotas or TRQs on US export volumes and to reduce non-tariff barriers on US goods, services, data and intellectual property.
These are precisely the right goals and they also happen to be the bedrock of actual US Free Trade Agreements.
Generally speaking, the agreements currently being negotiated by the administration are both predatory and harmful to the world economy. They increase baseline tariff rates regardless of the concessions that are provided to the US. The US isn’t offering much in return for the concessions. No greater market access to the American economy, no reduction in pre-2025 tariff rates, no liberalization of US non-tariff barriers to foreign goods and services. This is in part because they‘re merely (constitutionally dubious) executive agreements and any real FTA would require Congressional input and Senate ratification.
The new baseline tariffs, ranging from 10-20% on most of the major economies are being paid by US consumers and US businesses. The next administration should naturally reduce them to zero in return for additional efforts by US trade partners to address outstanding trade irritants. Some of the agreements also include zero-for-zero tariff reductions which ought to be drastically expanded in scope over time to cover an ever greater share of US imports and exports as more non-tariff barriers are simultaneously simplified or eliminated in the process. Remaining US sectoral tariffs on steel, aluminium and copper have to be eliminated as well.
Furthermore, any barter agreements that promise certain non-governmental purchases are not market-compatible and shouldn’t have been included in the first place. The US has an interest in promoting the expansion and further privatization of market economies. Any democratic government of a market economy, however, cannot enter into binding agreements on behalf of its private companies to purchase a certain amount of US products over a certain period of time. That‘s what socialist governments can dictate to their state-owned enterprises.
Having said that, the general quest to draw in more foreign investments is laudable. It contrasts with Biden‘s approach of tightening inward investment controls. Trump‘s already demonstrated that he‘s not seeking to limit foreign investment by walking back Biden‘s decision to block the Nippon Steel deal.
Another area of progress is the relaxation of Biden-era controls on tech exports (especially AI related semiconductors). These export controls were evidently self-defeating and undermined both US economic and strategic interests.
It should go without saying, that all these provisional framework agreements are not based on the principle of reciprocity, which President Trump likes to invoke. They‘re inherently asymmetrical. The US would equally benefit from more symmetrical agreements because any US opening and trade liberalization would increase US competitiveness, naturally attract more foreign direct and portfolio investments, encourage productivity gains and innovation, lower prices, increase product variety and quality while improving the US‘s geo-economic leverage over the rest of the world. Any reciprocal agreement would also be more sustainable because it would neuter the domestic political opposition against the agreements among US trade partners.
