Leibowitz on Trade: On to November

No doubt, we will hear from the presidential candidates at length about the pros and cons of the impeachment episode (or adventure, or fiasco). With the end of the proceeding, however, the country will move to a different tack: the 2020 election campaign. President Trump will face off against only one Democrat, unless a third party candidate appears. The issues making headlines will be immigration, health care, climate change, deregulation and others.

I doubt trade will make the top tier of issues in the presidential race. In the international trade area, I have looked into the candidates’ positions on such issues as China trade practices, the USMCA and the Section 232 tariffs on steel and aluminum (and possibly autos and auto parts). Will the election change these initiatives?

Maybe not so much. Of course, USMCA is a done deal. Bernie Sanders believes trade deals like USMCA are contrary to the national interest because they benefit large multinational corporations rather than workers and small businesses (whether that is accurate is another question). Elizabeth Warren has similarly criticized trade deals like NAFTA, the Uruguay Round trade agreements and the Transpacific Partnership. Joe Biden, having voted for trade agreements including NAFTA (1993) and the Uruguay Round (1994), does not oppose trade agreements as a matter of principle. Michael Bloomberg is a long-time supporter of agreements enhancing international trade and has not shown signs of reversing that position. However, the candidates have not been especially forthcoming about their intentions for 232 or China tariffs. 

Sen. Warren has been sharply critical of the Section 232 exclusion process, but has not engaged on the issue of the wisdom (or the legality) of these actions. Sen. Sanders seems to support Section 232 tariffs on steel and aluminum because he supports tariffs to protect American jobs and denies that tariffs don’t protect those jobs from such pressures as technological change. Sen. Sanders has criticized steel and aluminum tariffs on allies like Canada and the EU. Former Vice President Biden has been similarly absent from the debate about Section 232 tariffs and is generally supportive of tariffs as a way to convince China to change its ways. 

Reviewing the candidates’ positions, one can only conclude that trade policy is not a critically important issue in this year’s campaign. That does not mean that important changes won’t happen; there could be negotiations with the EU and the newly non-EU member (the United Kingdom) that change the Section 232 tariffs. Additional negotiations could take place with China, especially in light of the current coronavirus crisis. But at present, for those interested in trade issues like Section 232 and China, the absence of discussion is quite noticeable. 

The next opportunity for some important statements about trade policy might be Tuesday night, when President Trump delivers the State of the Union address to a joint session of Congress. This promises to be a tension-filled event, given the contentious impeachment proceeding that even then will not be quite finished. The president may take the occasion to reach out to Democrats to “find common ground.” But I am not confident that will be the case; it would be unconventional for him to do that.

So, on to the election campaign. Given the absence of serious discussion questioning tariffs as a negotiating weapon, trade policy is not likely to be a leading issue. Observers will have to be diligent in reading policy statements and speeches to glean nuggets of information about the candidates’ positions. I’m looking forward to that exercise, as frustrating as it is. It’s reminiscent of the old game of checking the lineup on Lenin’s tomb every Nov. 7 to see who’s in and who’s out in the Soviet Politburo. 

A few rather safe predictions are in order. First, if President Trump wins the election in November, the Section 232 tariffs on steel and aluminum will remain. Congress could, in 2021, reform or eliminate Section 232, but that is very unlikely at this point.  More likely is the courts overturning the tariffs or declaring some important features unlawful. 

Should President Trump lose, the person who defeats him would be unlikely to make radical changes in the tariff regime. No leading Democratic candidate has pledged to repeal the Section 232 tariffs (although Biden or Bloomberg are more likely than the others to take a hard look at them). 

Trade policy toward China is similar. The major Democratic candidates support strong action against China, although predictably they complain about the suffering in the United States from the imposition of tariffs that may be too broad, and the relatively tepid Phase One agreement with China. Again, Biden and Bloomberg are more likely to review the tariffs critically and change the focus, but I don’t expect an outright repeal of the tariffs on China. 

I could mention a number of other initiatives on trade that President Trump has undertaken—washing machines, solar panels, autos and auto parts, uranium, GSP reform, etc. They all seem solidly in the second tier of importance in the campaign, so we can only read the few tea leaves available in an effort to predict the future. 

It should be very interesting. 

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