New Administration Brings New Approach to Trade

Personnel is policy and President Joe Biden is bringing a new approach to trade issues, said John Murphy during his session “The New Administration: What to Expect on Trade” during IHA’s Connect SPRING virtual event.

Under the Biden administration, the country will see a return to the “regular order in trade policy,” consulting with industry, Congress and the appropriate inter-agency partners, said Murphy, senior vp, international policy at the U.S. Chamber of Commerce.

Fifty-five days into his administration, Biden has differed from his predecessor in his trade policy by strengthening alliances and favoring multilateralism, such as rejoining NATO and the WTO; improving relationships with the European Union, Canada, Japan and Korea; renewing a focus on value-based foreign policy, democracy and human rights; and adding climate diplomacy throughout cabinet departments. Murphy said Biden won’t engage in new tariff wars and has moved to suspend the $7 million tariff on Europe, a first step in lifting tariffs imposed by former president Donald Trump. The China tariffs, however, may remain in place for a while as Biden considers how to use the leverage they provide, Murphy said. He will conduct a thorough review of the tariffs, including the exclusion process, which Murphy said is broken. According to the Congressional Budget Office, the tariffs cost the average American household $1,200.

Areas where the Biden administration may remain the same as the Trump administration include viewing China as a strategic rival and peer competitor; a cautious approach to military engagement; and continued focus on the Indo-Pacific region.

Murphy said Biden’s nominee for United States Trade Representative, Katherine Tai, has a strong policy and political background, having served as a USTR trade litigator before the WTO and winning cases against China, and being chief trade counsel for the House Democrats where she bridged progressives and centrists, labor and business areas of the party. Her political experience will help bring a return to regular order for trade policy, he said.

Other key issues Murphy discussed included:

• COVID-19 Pandemic – The Biden administration is laser-focused on the pandemic, taking an active, aggressive approach, providing a massive fiscal and monetary response and focusing on vaccine production and distribution, Murphy said. Vaccination against Covid-19, he added, will unlock economic growth and perhaps even an economic boom. And, as a larger percentage of Americans are vaccinated, Biden will begin vaccine diplomacy, looking to help other countries produce and get the vaccine.
• U.S. & China – Biden will keep the current trade deal with China but pause on new trade negotiations, Murphy noted. While China made commitments to buy more U.S. products—it has bought more agricultural products—it hasn’t met other import targets, meeting only 60% of what it promised, he added. Murphy said Biden will add human rights, elevating the issue over the previous administration, and democracy in Hong Kong as China is violating agreements for independence there.
• Supply Chains – Biden issued an executive order to review vulnerabilities in supply chains, citing shortages during the pandemic. He wants to establish trusted partner networks, getting supplies from allies rather than non-ally countries. Biden also wants to expand “Buy American” mandates, but Murphy said that may not be possible for some products such as pharmaceuticals.
• Trade Negotiations – Biden will continue trade negotiations with the United Kingdom and Kenya and find a way to rejoin the Trans-Pacific Partnership that the Trump administration exited, Murphy said.