As the 2024 presidential election approaches, a surprising consensus has emerged between President Joe Biden and former President Donald Trump on the issue of heavy import tariffs. Despite their stark differences on a myriad of other policies, both leaders have embraced protectionist trade measures, signaling a continued commitment to shielding American industries from foreign competition.
Biden and Trump: Unlikely Allies on Trade Policy
When Donald Trump was in office, he imposed a 25% tariff on foreign steel, a move that significantly impacted companies like Clips & Clamps Industries, a Michigan-based auto supplier. The tariffs raised material costs, making it difficult for the company to compete with overseas rivals and resulting in the loss of several contracts. Jeff Aznavorian, the company’s president, had hoped for relief under the Biden administration. However, Biden has largely maintained Trump’s tariffs on steel, aluminum, and a wide range of Chinese goods.
“It was a little surprising that an ideologically different administration would keep the policies so intact,” Aznavorian remarked, noting the contrast with previous Democratic administrations that championed freer trade. This unexpected alignment between Biden and Trump on trade policy suggests that regardless of who wins the presidency, the United States is likely to continue its protectionist stance—a strategy that experts warn could exacerbate inflationary pressures.
New Tariffs and the Political Landscape
Recently, Biden announced additional tariffs on Chinese electric vehicles, advanced batteries, solar cells, and other products. The move aims to prevent Beijing from flooding the U.S. market with cheap imports. This protectionist approach resonates strongly in the Midwestern industrial states, which are crucial battlegrounds in the upcoming election.
“Where are the deciding states? Pennsylvania, Michigan, Wisconsin—right there, you can see that trade is going to have an outsize role,” said William Reinsch, a former trade official now at the Center for Strategic and International Studies. Both candidates have moved away from the post-World War II U.S. commitment to relatively frictionless trade, which was based on the idea that free trade would lower costs and benefit consumers and businesses globally.
The Economic Costs of Protectionism
While free trade has its critics, trade protectionism also comes with significant economic costs. It can raise prices for households and businesses, prop up inefficient companies, and provoke retaliatory measures from other nations. Trump’s aggressive tariff policies, which he proudly embraced as “Tariff Man,” aimed to reduce America’s trade deficits, particularly with China. However, these efforts did not revive the U.S. manufacturing base or significantly reduce trade deficits.
Trump has promised more of the same if re-elected, including a 10% tariff on all imports and a 60% tax on Chinese goods. Mark Zandi, chief economist at Moody’s Analytics, warns that such measures would lead to higher inflation, reduced GDP, and increased unemployment. A report from the Peterson Institute for International Economics estimates that Trump’s tariff proposals would effectively act as a $1,700 annual tax on middle-income families.
Biden’s Strategic Approach
Biden’s trade policies focus on subsidizing key industries like chipmaking and electric vehicle manufacturing to give them a competitive edge. This strategy reflects concerns about China’s growing military and technological capabilities, which are seen as threats to U.S. national security. Biden’s administration has also initiated investigations into Chinese trade practices, likely paving the way for further sanctions.
“The laissez-faire economic model of trade wasn’t working for the United States,” said Elizabeth Baltzan, a senior adviser to Biden’s top trade negotiator, Katherine Tai. “We want to correct for that. The measures you take in order to get a fairer economy may involve measures that could be labeled protectionist.”
The Shift in U.S. Trade Policy
The shift towards protectionism began with Trump but has been fueled by bipartisan concerns over China’s economic and geopolitical rise. One of Trump’s first actions as president was to withdraw from a free trade agreement with 11 Pacific Rim countries. He then imposed tariffs on foreign washing machines, solar panels, steel, and aluminum, citing national security concerns.
Trump’s most significant trade war targeted $360 billion worth of Chinese products, aiming to curb Beijing’s efforts to surpass U.S. technological supremacy. However, studies have shown that these tariffs did not achieve their intended goals of boosting U.S. employment or reviving the manufacturing sector. Instead, they led to retaliatory tariffs from China, particularly affecting American farmers.
The Political Impact
Despite the economic drawbacks, Trump’s trade policies succeeded politically, especially in the industrial Midwest and manufacturing-heavy Southern states. After taking office, Biden retained many of Trump’s trade policies, including tariffs on steel, aluminum, and Chinese goods. He also restricted China’s access to advanced computer chips and manufacturing equipment.
“Trade and national security have been combined into one thing,” Reinsch noted. “This is the first time we’ve had an adversary that posed both an economic and a security challenge.”
Looking Ahead
Biden’s administration has also introduced subsidies to encourage U.S. companies to manufacture goods domestically. For example, the 2022 Inflation Reduction Act offers a $7,500 tax credit for electric vehicles assembled in North America, with additional requirements for battery parts and critical minerals.
These initiatives have spurred a surge in manufacturing investment, contributing to the economy’s strong performance. However, the U.S. is unlikely to reverse its protectionist tilt anytime soon, especially as China continues to export its way out of economic troubles.
As for Aznavorian, he hopes for improved trade relations with U.S. allies but believes that protectionist policies are “definitely here to stay” when it comes to China and other adversaries.
FAQs
1. Why have both Biden and Trump embraced protectionist trade policies?
Both leaders believe that protectionist measures are necessary to safeguard American industries and jobs from foreign competition, particularly from China.
2. What are the economic impacts of these tariffs?
While tariffs aim to protect domestic industries, they can also lead to higher prices for consumers and businesses, reduced GDP, and increased unemployment.
3. How do these trade policies affect the upcoming election?
Trade policy is a significant issue in key battleground states like Pennsylvania, Michigan, and Wisconsin, making it a crucial factor in the election.
4. What are the differences between Biden’s and Trump’s trade strategies?
Trump’s approach is more aggressive and broad-based, while Biden focuses on strategic subsidies and targeted tariffs to boost key industries and address national security concerns.
5. Will the U.S. continue its protectionist trade policies in the future?
Given the bipartisan consensus on the need to counter China’s economic and geopolitical rise, it is likely that the U.S. will maintain its protectionist stance for the foreseeable future.
