Trade was in the spotlight during President Donald Trump’s tenure in the White House and while President-elect Joe Biden will move to lower the temperature of the discussions around trade the issues will not disappear.
“The American public is skeptical of trade,” noted Mary Lovely, a professor at Syracuse University, during a virtual conference on the automobile industry organized by the Federal Reserve Bank of Chicago.
Trade with Mexico and China remain key issues for the new administration, she said. “This isn’t going to be the Obama administration. The Biden administration will be much more hawkish on China,” she predicted.
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Lovely said it is unlikely that the new Biden administration will withdraw the tariffs Trump has applied on goods imported from China even though the Trump tariffs have been ineffective and harmful.
The Biden administration will engage with Chinese in effort to reduce tension on trade issues. But it is likely to bring their own list of demands, including a greater emphasis on the issues surrounding intellectual property, she said.
The Biden administration also is likely to use trade negotiations to promote its agenda on climate agenda.
However, the new president is expected to be more predictable in his handling of trade issues, noted Matt Blunt, the president of the American Automotive Policy Council. The AAPC also hopes the incoming administration will consult with the private sector before implementing new policies.
The new U.S. Mexico Canada Agreement, the trade pact that replaced NAFTA, is still not fully implemented.
The USMCA’s labor provisions will be tested under the Biden administration, which has promised his allies in the AFL-CIO to use the labor provisions in the trade agreement to force reforms across Mexico with the objective of forcing employers to pay higher wages.
Andrew Koblenz, general counsel of the National Automobile Dealers Association, noted the support in Congress for free trade.
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Even before the Trump era, the Democratic Party was split about trade with some Democrats closely aligned with organized labor, opposed to free trade and calling for more protection for workers, while others supported a full trade agenda
Republicans in Congress, however, used to deliver a solid, and unwavering block of votes for free trade agreements such as the North American Free Trade Agreement supported by Ronald Reagan, George H.W. Bush and George Bush, Koblenz notes.
Koblenz said Republican support for trade is now in flux. The upheaval in Washington D.C. highlighted by the riot in the U.S. Capitol on Jan. 6 has only exacerbated the uncertainty around GOP support for trade initiatives in Republican ranks.
Lovely, Blunt and Koblenz, however, said free trade in the automotive sector and other sectors of the economy still represents an opportunity to expand the economy for the benefit of all Americans.
Trump’s initiatives on trade also were ineffective work.
The recent post on the market-oriented website Seeking Alpha noted before the dispute escalated in 2019, 23% of all American imports came from China, roughly as much as neighboring Canada and Mexico combined.
U.S. goods trade deficit with China reached a record $419.2 billion in 2018, and while that shrunk to $345 million the next year or roughly the same level as 2016, the overall trade deficit did not. Unilateral tariffs on China diverted trade flows to other countries, boosting U.S. imports from Vietnam, Malaysia, Taiwan and even Mexico, the post noted.
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“Economists have also found Chinese exporters generally didn’t lower prices to keep their goods competitive, meaning tariff duties were mostly paid by U.S. companies and consumers, and for China, it mainly led to a loss in export value,” Seeking Alpha noted.