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The new age of managed trade?

I expect it to work as well as other New Age remedies

President Biden and European Commission President Ursula von der Leyen talk to reporters about pausing the trade war over steel and aluminum tariffs during the Group of 20 summit in Rome on Oct. 31. (Evan Vucci/AP)
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A few days ago my Post colleagues Annie Linskey, Chico Harlan and Seung Min Kim wrote that “President Biden sought to reverse key policies and approaches of former president Donald Trump during this weekend’s summit of the Group of 20, and attempted to ensure those reversals would stay in place even if there is a change in American leadership.” They cited several examples, including agreements on ending government funding of new coal plants, the global tax deal and reinvigorating talks with Iran.

The one that caught my eye, however, was the trade deal with the European Union ending U.S. tariffs on steel and aluminum imports up to a certain quota. Until now, trade had been an area where the Biden administration has pursued … if you don’t like “Trumpism with a human face,” then let’s say “continuity” with the Trump administration’s approach to international trade. That this clashed with its grand strategy was a bit of a problem.

So, does this deal represent a break from the Trumpian approach? The Hinrich Foundation’s Stephen Olson sees continuity. He points out that the deal gives the E.U. “3.3 million metric tons of annual duty-free entry [which] is well below the 4.8 million metric tons of steel the U.S. imported from the E.U. before the Trump tariffs were put into place.” His conclusion? “The agreement is not a step towards freer trade nor is it a rebuke of Trumpian protectionism. Quite to the contrary, it is an affirmation of Trump’s approach to trade.”

Over at the Monkey Cage, Bentley Allan and Todd Tucker frame the deal in a slightly different way. They focus on the ways in which it promotes carbon-based adjustment mechanisms for sectoral trade, which previously had been a no-no in international trade agreements. Nonetheless, Allan and Tucker conclude: “This deal shows that agreements like the WTO’s treaties are fundamentally political and open to change. States don’t need to worry so much about bending or breaking the rules if they want to step outside of the WTO and create deals that allow aggressive action against climate change in specific sectors.” This sounds similar to Olson’s analysis.

There is a difference between the Trump and Biden approaches to trade. Trump raised protectionist barriers on pretty much every country and engaged in multiple trade wars on multiple fronts. Biden wants a more targeted trade war with China, and to make that approach sustainable he is cutting managed trade deals with the E.U. The two commonalities are: a) trade conflicts with China; and b) a less influential multilateral trading system centered on the World Trade Organization will have less and less purview on the global trade regime.

This jibes with the conclusions of the Economist’s Soumaya Keynes. In an October survey on global trade, she predicted a lot more managed trade due to issues ranging from global supply chain fragilities to human rights concerns. She also cautioned that this approach “involves more intimidation, discrimination, and ultimately, isolation. In short, the very foundations of the multilateral trading system are under assault.”

This sounds great to both Biden and Trump trade policy proponents. Olson’s column praised the Trump approach, explaining “managed trade was a defining feature of the Trump administration’s policy. Under this approach, trade outcomes are a function of the leverage you bring to the negotiating table.”

The meager results of the Trump administration’s trade sanctions should hint that this approach might not work out as well as hoped. For one thing, other countries have leverage, too. Indeed, as Allan and Tucker note, one reason for the deal was the European Union successfully played hardball, threatening additional sanctions: “the United States faced a short timetable and difficult choices if it wanted to cooperate with the E.U. It had to negotiate or risk facing trade barriers.”

The Biden administration hopes to pursue managed trade with a joint transatlantic front. There is no denying that this is a more sensible approach than Trump’s all-trade-wars-all-the-time gambit. But it raises the awkward question of how sustainable such an approach would be. To put it bluntly: Would a Trumpist Republican continue this approach?

A senior administration official told my Post colleagues, “Our allies believe that we have to lock in progress as much as possible while there is a president who is a deeply committed transatlanticist in office.” As we learned with the transition from Barack Obama to Trump, however, executive agreements do not lock in all that much. It would not be difficult to envision a GOP successor to Biden tearing up all these bilateral agreements.

Maybe this new era of managed trade will prove to be enduring — but color me skeptical.

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