What negotiation tactics does Donald Trump use
The incumbent US President Donald Trump clearly broke with the trade policy of his predecessors. Under Trump, the US withdrew from the Trans-Pacific Partnership (TPP); the agreements with Mexico and Canada (NAFTA and USMCA) and South Korea (KORUS) were renegotiated. The Trump administration imposed tariffs on steel and aluminum, threatened car tariffs and started a tariff spiral with China. Washington sparked a deep crisis in the World Trade Organization (WTO) when the Trump administration blocked the appointment of the Appellate Body and the appointment of a new director general.
President Trump seems to see international trade as a zero-sum game. For him, a negative trade balance means that the respective trading partners do not respect the applicable rules of the trading system. China has been at the top of the agenda for the past four years; however, the president was just as critical of the trade policies of close partners such as the European Union (EU) and Japan. In order to achieve his goals, President Trump put the emphasis on bilateral and quid-pro-quo solutions instead of multilateral cooperation. Because he was more interested in "deals" than enforceable international trade law, the president's approach was very transaction-oriented. His motto was "America First".
Trump's trade agenda
President Trump's trade agenda was based on four pillars:
Realignment of US trade relations through the enforcement of national security interests:
The Trump administration put national security interests first. Trade deals should not strengthen the “adversary”, according to the president's agenda. With the argument of national security, his administration also justified the tariffs on steel and aluminum, for example, and threatened tariffs on automobile imports.
Renegotiating "outdated and unfair" free trade agreements and negotiating new agreements "that benefit all Americans":
The Trump administration wanted to negotiate fairer and more balanced trade deals to promote U.S. jobs and prosperity. The existing free trade agreement between the USA, Mexico and Canada, NAFTA, now renegotiated USMCA, should be more advantageous for all sides. New trade agreements are currently being negotiated with the UK and Kenya. They want to negotiate with the EU in order to compensate for the imbalances in trade that have existed for years, according to the agenda, and to reduce the trade deficit. In addition, the intention was to build on the agreements concluded in 2019 with Japan and to conclude a "Phase Two" agreement with China.
Aggressive enforcement of (US) commercial law:
Rigorous application of national trade laws was also one of the priorities of the Trump administration. Unfair trading practices should no longer be tolerated. These laws include, for example, the 1974 Commercial Act with Section 301. This allows the President to use tariffs and quotas as retaliatory measures. Section 232 of the 1962 Commercial Act allows imports to be restricted if they endanger national security. The Trump administration imposed 232 tariffs on steel and aluminum and 301 tariffs on Chinese imports. It also took more anti-dumping and countervailing measures than its predecessors. Both Sections 232 and 301 had seen little use since the WTO was founded in 1995. Section 301 was occasionally used, but was accompanied by lawsuits at the WTO - the last time before Trump took office was in 2013 against Ukraine for dealing with intellectual property rights. US President Ronald Reagan last took action under Section 232 in 1986.
Defense of US interests at the WTO:
The Trump administration is critical of the WTO. The organization is “no longer able to keep up with modern economic policy challenges”. Trump criticized, for example, that the WTO's dispute settlement system had failed to meet deadlines, exceeded its mandate and intervened in areas for which the WTO members themselves were responsible. In response, to this day, the Trump administration has blocked the nomination of members on the Appellate Body and refuses to engage in serious reform discussions. When filling the WTO general director post, the US is currently speaking out against the Nigerian candidate, who is supported by the majority of WTO members, and is instead calling for the South Korean candidate, who is considered to be more US-friendly, to be filled.
How does the population rate Trump's trade policy?
Overall, according to a Gallup poll (as of February 2019), a large majority of Americans now believe that international trade is good for the country. Overall, Republicans and Democrats are relatively unanimous on this issue, but Democrats (79 percent) are more likely than Republicans (70 percent) to believe that trade is an opportunity for economic growth. Until 2011, Republican supporters were even more positive about trade than Democrats. Opinion polls over the past four years do not show that Americans are very satisfied with Trump's trade policies. In 2018, only 31 percent of those surveyed said they expected special tariffs to have positive effects. In 2019, Trump's trade policy was rated no better than his overall performance as US president.
The business community was and is extremely critical of the Trump tariffs. In particular, farmers, who suffered great losses from China's retaliatory measures, repeatedly called for the new trade barriers to be removed.
What trade policy is Joe Biden planning?
Joe Biden has not yet announced a nomination for the office of Minister of Economic Affairs (as of early December 2020). He or she is responsible for 232 decisions. For the office of the US Trade Representative (USTR) he would like to nominate Katherine Tai, currently the chief adviser to the Democrats ("chief lawyer on trade") in the Ways and Means Committee of the House of Representatives, which is responsible for trade issues. The area of responsibility of the USTR includes the 301 examinations. Tai has already been responsible for China issues at the USTR in the past and speaks Mandarin. A first official trade policy agenda (2021 Trade Policy Agenda) of the Biden administration can be expected in spring 2021, when the administration and the new USTR have started work.
As Vice President under Barack Obama, Joe Biden had driven the negotiations on the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). It is questionable whether, as President, he will pick up this thread again and give trade policy a high priority. It seems certain that, at least for the first time in his presidency, he will not give trade agreements a high priority, because the focus will initially be on direct measures for the domestic economy. It is also certain that trade unions and environmental groups will be heard more under Biden. It is therefore unlikely that Biden will quickly pull back the tariffs on steel and aluminum, which are advocated by the respective unions. Where necessary, Biden also wants to use tariffs, if not to “fake toughness”. Nonetheless, he made it clear that he, too, wanted to consistently enforce US trade law when US jobs were threatened.
New trade agreements are not on Biden's agenda for the time being. In principle, however, he would like trade agreements to be based on higher labor and environmental protection standards. Climate protection is important to Joe Biden: For example, he spoke out in favor of a border adjustment for CO2 during the election campaign.
Unlike his predecessor, Biden will focus more on multilateral solutions. It is to be expected that the USA will again participate more in the reform debate on the WTO. It remains to be seen whether they will also give up their blockade of the appeal body.
President Trump wanted to bring jobs back to the US. However, with his trade policy he also damaged his own economy. With Joe Biden, the past four years will not be erased. Nor will it be possible to resolve all trade policy conflicts overnight. Joe Biden will also want to prove that he is defending US jobs, and his trade policy will also contain protectionist elements. But he will be more cautious in the use of tariffs and once again seek solidarity with partners such as the EU in dealing with China.
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