At the risk of understatement, Donald Trump’s trade policy was a miserable failure.
But the 2020 election did not lead to any changes. Biden also has been a protectionist.
In some ways, he’s been even worse than Trump. A rather ignoble achievement.
Sadly, this protectionist version of bipartisanship is the reversal of what used to exist.
James Capretta and Stan Veuger give some details in an article about the Trump-Biden approach for Foreign Policy.
The trade principles that guided U.S. international economic policy prior to 2017 were embraced to varying degrees by 12 successive administrations…the embrace of freer trade gathered force globally because the United States—as the dominant Western democracy—heavily promoted and supported it. …the old consensus was never challenged as fundamentally misguided by either major party until Donald Trump, a lifelong protectionist, became the Republican presidential nominee in 2016… The real surprise since 2021 has been that President Joe Biden not only has not repudiated the trade policies of his predecessor but also has amplified the philosophy behind them in a way that raises serious questions about the future of U.S. and global trade policy.
The authors, both from the American Enterprise Institute, explain how Biden is going astray.
…the president has made no moves suggesting even modest support for existing or new free trade agreements and many moves that point to a willingness to undermine the free trade edifice that was carefully erected over seven decades. Most especially, the administration has pushed the most aggressive direct subsidization of favored industries and companies in the entire postwar era, in apparent violation of the trade principles the United States agreed to when joining the WTO. …As matters now stand, the Biden administration’s protectionist moves will provide fuel for higher inflation. And a “green jobs” agenda comes with significant downside risk… Political connections and lobbying prowess will rise in importance, while technical competence and efficiency will fall.
That final sentence is key. Capretta and Veuger are correct to warn that protectionism enables cronyism and corruption.
And that’s bad news for the economy. We want companies to prosper based on how well they serve consumers, not on the basis of how many lobbyists they have in Washington.
The bottom line, as the authors explain, is that free trade – unlike protectionism – has a strong track record of success.
…the old consensus was not the disaster that critics claim. Quite the contrary. The historical evidence shows that expanding trade was central to the most successful run of wealth expansion and poverty reduction in history, and it delivered tremendous value to the American consumer. …trillions of dollars in economic benefits have accrued to Americans from global commerce. Further, as more countries joined the world trading system in the 1980s and 1990s, some 1 billion people were lifted out of extreme poverty.
Regarding the overall case for free trade, here’s my video on the topic.
I’ll close by stating that some defenders of the Trump-Biden approach claim that free trade is not practical in a world where China misbehaves.
That is a legitimate concern. But Trump and Biden have not targeted China. Their protectionist policies have applied to all of America’s trading partners.
No wonder the United States gets a low ranking for trade barriers. This is bad news for American workers. It’s also bad new for the rest of the world, especially poor nations.
P.S. Don’t be surprised if Biden decides to copy the European Union’s carbon protectionism.
