International Trade and the 2020 Elections: What to Expect from a Biden Administration

In fact, the Bureau of Labor Statistics data reveals that back in 2000, the U.S. economy offered just over 17 million manufacturing jobs. By 2020, right before the start of the Covid recession, that figure had dropped to just under 13 million. This 25% decline in American industrial jobs over the last two decades compares to a 10% increase in all government jobs during the same period, as well as a 20% increase in jobs within the professional and business services industry.

History reveals that these changing jobs numbers can affect the swing vote at the polls.

By 2016, the on-going decline in domestic factory production had increased voter support for then-candidate Donald Trump. Promising to win back American jobs lost through “unfavorable” international trade deals, he even vowed to dismantle the popular North American Free Trade Agreement (NAFTA) with Canada and Mexico. His message convinced many middle-income, blue-collar workers to turn their backs on the Democratic party, barely winning the historically “blue” states of Pennsylvania, Michigan, and Wisconsin.

At the time, the Pew Research Center analyzed verified voter rolls to find that 71% of Trump supporters had less than a college degree, whereas this same group comprised only 57% of Clinton supporters. In the 2020 election, however, it appears that these blue-collar workers were less than satisfied in Trump’s ability to turn around the continuing decline in U.S. manufacturing jobs. Candidate Biden corralled all those states back into the Democratic fold.

What kind of trade policy can we expect from the new Biden administration?

Trade analysts note that President-elect Biden has pledged to tax American firms that shed jobs abroad, curtailing many opportunities for continuing gains from international trade with the U.S. It also appears that he shares President Trump’s concerns over China's role in cybercrimes and their lack of enforcement in the theft of U.S. intellectual property and trade secrets.

The BBC reports that the Biden staff are talking with trade officials in the U.K. about re-starting talks for joining the Trans-Pacific Partnership (TPP)—a process that President Trump abandoned, claiming it was a poor economic deal for the U.S. However, the TPP is a trade agreement with 11 Pacific countries. The Obama administration pursued membership in TPP as a way of countering China’s growing economic and political influence in the region. Biden may feel that any negative economic impact from joining the TPP is worth gaining a multi-lateral agreement that can mitigate China’s growing reach in the East.

Further, analysts expect Biden to be more sensitive to our Western trade partners, expressing a desire to decrease the trade tensions with the European Union (EU). Specifically, he is less concerned than Trump about on-going EU subsidies of Airbus taking manufacturing jobs away from Boeing. Even Trump’s steel and aluminum tariffs that have hurt both Canada and the EU will likely be revisited and reduced by the incoming Biden administration.

Ultimately, the new Biden administration may not have significantly different goals for U.S. trade policy, but they may exercise different means for achieving them.

 

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