142. Can Biden Make Trade Boring Again?

Episode Summary

Executive Summary: The episode assesses what a Biden administration could mean for U.S. trade policy: likely calmer, more multilateral, and less personally driven than Trump’s, but still constrained by inheritances like WTO disputes, steel tariffs, China’s Phase One deal, labor enforcement, and pending trade negotiations. The hosts argue Biden’s trade team may matter less than restoring a functional interagency process and working with allies.

Main Topics: Biden’s trade team and governance style (Priority: 5/5): Discussion of likely USTR contenders and whether Biden will choose a technocrat or politician. The hosts stress that restoring interagency coordination may matter more than any single appointee. WTO leadership and appellate body reform (Priority: 5/5): The U.S. blocking of Ngozi Okonjo-Iweala and the WTO appellate body shutdown are seen as early tests of Biden’s multilateral approach. A quick resolution is likely on the director-general pick, but appellate body reform will take longer. Steel tariffs and transatlantic relations (Priority: 5/5): The episode explores whether Biden can reduce tensions with the EU by adjusting Trump-era steel tariffs, possibly through tariff-rate quotas or easier exclusions, while avoiding a WTO fight over national security tariffs. Digital services taxes and tariff retaliation (Priority: 4/5): The hosts examine the looming end of the U.S.-France suspension deal over digital services taxes, with potential tariff retaliation and broader tensions over taxing big tech and the OECD tax process. Trade enforcement under Biden (Priority: 4/5): Likely areas of enforcement include inherited Section 301 and Section 232 actions, forced-labor import bans tied to Xinjiang, and the USMCA labor rapid-response mechanism. China and the Phase One deal (Priority: 5/5): The Biden administration must decide whether to keep focusing on China’s Phase One purchase commitments, which are politically awkward and likely unattainable, or shift toward a broader, more alliance-based approach. Trade deals and the likely slowdown in headlines (Priority: 3/5): Negotiations with the UK and Kenya are discussed, but both appear constrained by timelines, market-access politics, and U.S. domestic trade politics, suggesting fewer dramatic trade breakthroughs under Biden.

Key Arguments: Biden is likely to run a more orderly trade policy process, but the quality of interagency coordination may matter more than who is named USTR. A politician may be favored over a technocrat because Biden may want someone who can rebuild relations with allies and manage WTO diplomacy. The WTO director-general deadlock could be resolved quickly if the U.S. backs Ngozi Okonjo-Iweala, though Senate dynamics could still complicate matters. Reinstating the WTO appellate body is not a quick fix because U.S. concerns about its functioning are bipartisan and reforms would be required. Steel tariffs are a major test of Biden’s multilateralism; he may need to convert or soften them without triggering a direct WTO showdown. The digital services tax fight is likely to intensify as the French begin collecting revenue and the U.S. faces pressure to retaliate. Biden may use tougher but more rules-based enforcement tools, especially forced-labor bans and USMCA labor provisions, rather than relying heavily on new WTO litigation. The Phase One China deal is politically risky for Biden because Trump could claim success if targets are met, while Biden could be blamed if they are missed. A Biden administration may prefer a broader strategy on China that incorporates allies and links trade to climate, human rights, and security issues. A quick U.S.-UK trade deal is unlikely because of market-access issues, agriculture, and the time pressure from trade promotion authority expirations.

Data Points: WTO director-general stalemate date: November 6 - Formal meeting to pick the WTO chief was postponed indefinitely after the U.S. blocked Ngozi Okonjo-Iweala. Tariff suspension end date: January 6, 2021 - U.S.-France suspension on threatened retaliation over digital services taxes was set to expire on this date. Trade promotion authority expiration: July - The hosts note that U.S. trade promotion authority would expire in July, constraining the timing of any U.S.-UK deal. Congress notification deadline under TPA: April 1 - To use trade promotion authority, the administration would need to signal a signed deal by this date. Phase One purchase target: Additional $200 billion - China was expected to buy an additional $200 billion of U.S. exports under the deal, a target the hosts describe as unlikely to be met. Year of forced-labor import enforcement change: 2016 - The episode references the removal of a loophole that made enforcement against goods made with forced labor more important.

Pivotal Quotes: "It's gonna use to buy American products, support American jobs." — Joe Biden: Campaign stump speech clip introducing Biden’s trade message. "Not Trump's chaotic trade war, erratic tweets and bluster that's only stiffed American workers and consumers, including farmers." — Joe Biden: Campaign clip contrasting Biden’s approach with Trump’s trade policy. "I do expect that trade will be will become boring again." — Chad Bown: Closing reflection that a Biden-era trade policy may be less dramatic and less media-driven.

Implications: Biden-era trade policy is likely to be more institutional, multilateral, and less theatrical, but it still faces hard choices on China, the WTO, tariffs, and labor enforcement. Companies should expect fewer shocks, not fewer disputes.