By PAUL WISEMAN
AP Economics Writer
WASHINGTON (AP) — As president, Donald Trump imposed a 25% tariff on foreign steel, which hurt Clips & Clamps Industries, a Michigan auto supplier — raising its materials prices, making it harder to compete with overseas rivals and costing it several contracts.
Jeff Aznavorian, the company president, thought he might enjoy relief once Joe Biden entered the White House. Instead, Biden largely preserved Trump’s tariffs — on steel, aluminum and a mass of goods from China.
“It was a little surprising that an ideologically different administration would keep the policies so intact,” Aznavorian said.
Trump and Biden agree on essentially nothing, from taxes to immigration. Yet on trade, they have embraced surprisingly similar approaches. Which means that whether Biden or Trump wins the presidency, the United States seems poised to maintain a protectionist trade policy.
Last week, in fact, Biden announced some new tariffs, on Chinese electric vehicles, advanced batteries and other products, that he said would keep Beijing from flooding the United States with cheap imports.
The protectionist tilt reflects the widespread view that opening the nation to more imports — especially from China — wiped out American manufacturing jobs,, a potent topic in the Midwestern industrial states that will likely decide who wins the White House.
“If you look at the election, it’s obvious,” said William Reinsch, a former trade official now at the Center for Strategic and International Studies. “Where are the deciding states? Pennsylvania, Michigan, Wisconsin — right there, you can see that trade is going to have an outsize role.”
In their own ways, the two candidates have ditched a U.S. commitment to frictionless trade — low barriers and scant government interference — that were a bedrock of American policy after World War II.
Yet trade protectionism carries economic risks. It can raise costs as the nation struggles to tame inflation. It can prop up inefficient companies. It provokes retaliation against American exports. And it sours relations with allies and adversaries alike.Trump, who brazenly labeled himself “Tariff Man,” tried to pummel America’s trading partners with import taxes, vowing to shrink America’s trade deficits, especially with China.
He did pressure Mexico and Canada into rewriting a North American trade deal that Trump insisted had destroyed U.S. manufacturing jobs. He also persuaded China to agree to buy more American farm goods. But his efforts didn’t revive the manufacturing base — factory jobs make up a smaller share of U.S. employment than they did before his presidency — or permanently shrink America’s trade deficits.
Trump has vowed more of the same in a second term — a 10% tariff on all imports and a 60% tax on Chinese goods.
Mark Zandi, chief economist at Moody’s Analytics, warns that Trump’s tariff plans “would spark higher inflation, reduce GDP and jobs and increase unemployment, all else equal.” A year after the import taxes were imposed, Zandi estimates, average consumer prices would be 0.7 percentage points higher than they would otherwise be.
Biden favors subsidizing such U.S. key industries as chipmaking and EV manufacturing to give them a competitive edge. It’s a stance that reflects worry that China’s rising military and technological might imperils America’s national security. As last week’s announcement showed, Biden isn’t averse to new tariffs, either.
“The laissez-faire economic model of trade wasn’t working for the United States,” said Elizabeth Baltzan, a senior adviser to U.S. Trade Representative 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.”
Dani Rodrik, a Harvard economist who was an early critic of globalization, views Biden trade policies more favorably than he does Trump’s approach.
“Trump’s was knee-jerk and incoherent; there is little evidence that his trade restrictions on China did any good to workers or the middle class in the U.S.,” Rodrik said.
By contrast, he said, “Biden’s approach is strategic and based on rebuilding U.S. manufacturing capacity and investing in the green transition, so fundamentally strengthening the U.S. economy rather than crass protectionism.”
Either way, a consensus has formed in recent years that U.S. trade policy had to change. David Autor, an economist at the Massachusetts Institute of Technology, and two colleagues concluded that from 1999 to 2011, cheap Chinese imports wiped out 2.4 million American jobs.
More recently, China’s rise as America’s No. 1 geopolitical rival has created a bipartisan effort to reduce America’s reliance on Beijing for supplies of everything from pharmaceuticals to “rare earth” minerals used in electric cars and cellphones.
The sea change in policy started with Trump.
One of his first presidential acts was to dump a free trade agreement the Obama administration had negotiated with 11 Pacific Rim countries.
Then Trump imposed taxes on foreign washing machines, solar panels, aluminum and steel.
Finally, he hammered $360 billion of Chinese products with tariffs for Beijing’s efforts to surpass U.S. technological supremacy through illicit tactics. China lashed back with retaliatory taxes.
Did Trump’s tariff war achieve anything?
A study by Autor and three colleagues concluded that Trump’s import taxes failed in their goal to return jobs to the American heartland. The tariffs, the study found, “neither raised nor lowered U.S. employment” where they were supposed to protect jobs.
If Trump’s trade war fizzled as policy, though, it succeeded as politics. Autor’s study found that support for Trump and Republicans rose in the industrial areas most exposed to the import tariffs.
After entering office, Biden retained many of Trump’s trade policies. He made no effort to revive Obama’s old Pacific Rim trade pact. He kept Trump’s steel and aluminum tariffs, while letting some trading partners avoid them until they reached a quota. He retained the China tariffs. Biden turned up the heat on Beijing by restricting its access to advanced computer chips and the equipment to make them.
The United States seems unlikely to reverse its movet toward protectionism anytime soon. China, struggling to revive its own economy, is trying to export its way out of trouble, threatening to overwhelm world markets with cheap EVs and other products.
When it comes to China and other U.S. adversaries, Aznavorian said, he’s convinced that protectionist trade policies are “definitely here to stay.”
