Excellent editorial in the Wall Street Journal today on failure of President Biden to formulate a viable trade policy distinct from Trump’s fiasco. This tracks my earlier article in March. Here are some main points of the editorial.
- The news leaking from the White House is that President Biden may finally ease tariffs against some Chinese goods—a mere 18 months into his Administration. The extended indecision underscores that Mr. Biden essentially has no trade policy while the rest of the world moves ahead with new trade deals.
- Biden’s China policy demonstrates his trade paralysis by political analysis.
- The tariffs were supposed to be strategic leverage to change China’s policies, but they’ve mostly hurt U.S. farmers, consumers and businesses.
- Cutting tariffs on consumer imports would help ease inflation by as much as 1.3 percentage points in one estimate.
- S. tariffs are blunt instruments that harm Americans more than they harm the Chinese Communist Party. A smarter policy would form alliances with other countries to focus on specific predatory behavior—such as cybertheft and telecommunications.
- The Administration has also slow-rolled trade talks with the U.K., despite Britain’s eagerness since it left the European Union in 2020. The President’s biggest trade move with Canada last year was to double the tariff on softwood lumber imports.
- All of this is a failure on the President’s own terms. “America is back” was his early mantra, including a pledge to help U.S. businesses “win on the world stage.” Mr. Biden said he’d improve on Mr. Trump’s policy by strengthening trade with European and Asian allies, and then pressure China with a united front.
- But the Administration has reverted to protectionism. The few industries that benefit from the Trump tariffs have lobbied President Biden to delay or block new trade agreements.
- In lieu of joining CPTPP, the Administration in May launched its own Pacific trade framework. It proposes shared standards in areas like taxation and green energy but lacks binding commitments such as tariff cuts. The Biden framework includes the promise of a digital-trade deal but without any details. U.S. allies in Asia are seeking updated standards on cybersecurity, international data storage and other fixtures of 21st-century commerce. The new agreement cites these issues as priorities but takes few steps toward an actual deal.
- Biden’s trade abdication is all the more puzzling given inflation and the risks of recession as interest rates rise. It’s another example of this White House putting politics above policies that spur economic growth.
Malawer, Biden’s Trade Policies (Year One) — More Aggressive than Trump’s? China and WTO Review (March 2022).
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