Joe Biden, once admitted he is not “an expert on international trade matters”. President Donald Trump has left as his legacy the modernization of NAFTA with the implementation of the USMCA, which provides the strongest protections against digital trade barriers of any trade agreement. A Biden presidency would add more taxes to international trade, add costly border regulations, benefit only well-connected organized labor, and if any agreement is reached, he’ll likely abandon it at congress.
On the other hand, Trump signed every trade deal he tasked USTR Ambassador Robert Lighthizer with negotiating: Korea, China, Japan, and most recently the USMCA. On the 2021 trade agenda Trump has negotiations with the UK, EU, India, and Kenya in the works.
Will a Biden presidency be able to carry a trade negotiation into a signed agreement and then through Congress for implementation? His record is not promising, Biden supported NAFTA and the Trans-Pacific Partnership agreement and then came out against both of them when faced with the slightest criticism.
But, before it gets there, what would Biden negotiate? Time and time again, Biden promised to repeal the Republican Tax Cuts and Jobs Act of 2017 (TCJA) “on day one.” As part of his plan to raise taxes by an estimated $4 trillion. So, yes, Biden’s trade policy includes more taxes.
His proposal has three chief components:
– In addition to raising the corporate rate to 28% Biden calls for a 10% “offshoring penalty surtax” on profits from manufactured goods or services produced by American companies overseas and then imported.
– Adding a carbon border tax, or quota, on carbon-intensive goods in order to escalate trade wars
– An additional $400 billion in public procurement spending, much forced to be spent on pork barrel patronage, along with restrictive trade rules that would violate WTO obligations and invite tariff retaliation.
Biden proposal, framed as an oxymoron “Pro-American Tax and Trade Strategy” will create new challenges for U.S. businesses at home, abroad, and hurt their ability to compete on a competitive playing field. Ultimately it would culminate in greater uncertainty in the market.
The fundamental flaw of Biden’s trade policy is that its designed for an audience of one: well-connected union bosses. His Made in America plan claims unions are essential to democracy, economic stability, and markets. However, only 10% of American workers are members of a union, the lowest participation rate ever recorded. Certainly, the other 90 percent of American workers are also vital to democracy and the economy. Yet, Biden seems to target their work for extra taxes and provide carveouts to the few- creating a trade policy that works only for the few.