Biden's Trade Policy: No Unconditional Return to the Past... Anticipated Shift Toward Multilateralism

Trade Minister Tong Sang-guk and Tariff Disputes Subside... National Priority Policy Remains Maintained

President-elect Joe Biden [Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Global trade, which was rife with tariffs and sanctions, is expected to shift toward multilateralism in the Joe Biden era. It is gaining credibility that President-elect Biden will employ a completely different approach from Donald Trump by strengthening cooperation with allies to pressure China in terms of methodology, while also seeking differentiation from the Barack Obama administration.

According to the Wall Street Journal (WSJ) and others on the 9th (local time), the Biden transition team will soon begin a review of the trade policies implemented by the Trump administration over the past four years. Although no specific plans have been announced, it is expected that they will examine the steel and aluminum tariffs imposed by the Trump administration, as well as tariffs on China and Europe. Richard Trumka, president of the AFL-CIO, the largest labor federation in the U.S., said, "Some tariffs work effectively as a forced measure to break agreements in trade, but some have been imposed without effect," suggesting the need for a review.

Given the moderate free-trade stance attributed to President-elect Biden, tariff conflicts with trade partners are expected to subside on the surface. WSJ reported, "President-elect Biden may begin rebuilding relationships by negotiating the termination of some tariffs." In particular, it is anticipated that he will form economic blocs by rebuilding economic alliances with traditional allies to exert pressure on China.

At present, the possibility of rejoining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which the U.S. withdrew from after President Trump took office, cannot be ruled out. Additionally, it is expected that the U.S. will restore its leadership, strengthen cooperation with World Trade Organization (WTO) member countries, and actively voice opinions on WTO reforms and the appointment of the director-general.

However, rather than an unconditional return, there is a strong likelihood of approaching in a different form that considers the time elapsed and the changed U.S. stance. Seojin Kyo, senior researcher at the Korea Institute for International Economic Policy, said, "Looking at agreements like the USMCA signed with Canada and Mexico, digital trade has been emphasized much more than in the past," adding, "In that respect, the CPTPP is too limited to reflect the U.S. perspective." It is possible that the CPTPP could be dismantled entirely to create a new form of Pacific trade agreement.

The long-standing trade war with Europe over subsidies is likely to ease. On this day, the European Union (EU) announced that it would impose tariffs on $4 billion worth of U.S. products and services in response to illegal U.S. support for Boeing, the American aircraft manufacturer.

This follows the WTO's decision last month that U.S. support for Boeing violated international trade regulations. The EU also expressed hope that the next U.S. administration would soften its tough stance on trade, leaving room for both sides to resolve the issue.

Moreover, since President-elect Biden pledged during his campaign to implement a "Made in America" economic policy, the principle of prioritizing domestic interests is expected to be maintained.

This is not significantly different from President Trump's "America First" policy. Tony Blinken, former Deputy Secretary of State and head of Biden’s foreign security team, stated in September that while he did not completely rule out new tariffs, "tariffs will be used when necessary, but with strategy and planning."

Some have evaluated President-elect Biden's trade policy as having a similar "protectionist" tendency to President Trump. Forbes noted the trade wars during Trump's four years in office and said, "The global economy at the time of Biden’s inauguration in January next year is fundamentally different from when he finished his vice presidency in 2017."

For now, President-elect Biden is expected to focus on domestic economic issues such as preventing the spread of COVID-19 and mitigating the resulting economic damage rather than trade. However, trade policy is an area where Biden can actively show his stance without Senate approval, where Republicans hold a majority, so it is highly likely that related matters will be reviewed and advanced soon. Scott Lincicome, senior researcher at the U.S. think tank Cato Institute, pointed to trade and immigration, explaining, "These will be among the few policy areas where Biden can deliver results."

This content was produced with the assistance of AI translation services.