In the 2023 release of the Trade Barrier Index the United States dropped from 51 to 65, indicating the country has added more trade barriers relative to the 88 included in the Index.
There are two main policy choices driving America to last.
First, the United States is the leader in imposing Non-Tariff Barriers. These are the “fine print” that keep out things like foreign made infant formula or limit the amount of real sugar that can enter the country. They add punitive tariffs to things like washing machines and solar panels and require certifications or licenses to import certain items. The Biden administration has continued use of Non-Tariff Barriers, for instance, a limitation on the value of foreign minerals used in electric vehicle batteries, is a barrier found in the Inflation Reduction Act.
Other measures in the IRA have drawn the ire of America’s closest trade partners who may respond with tariffs or subsidies of their own.
In most countries, Non-Tariff Barriers are usually justified as tools to ensure imports like fruits and vegetables are safe for human consumption. Yet, the Trade Barrier Index exposes that the United States deploys more of these barriers than can be justified, and end up protecting domestic industries from foreign competition – allowing the government to pick winners and losers (you).
Second, the Facilitation component scores countries on several measures including membership in Free-Trade Agreements. In the last two years most countries signed at least one new trade agreement, the United States added zero. Even the United States-Mexico-Canada Agreement signed by Trump only replaced NAFTA. Other countries are not just updating old agreements- they are granting each other market access in comprehensive free trade agreements.
That includes the Trans-Pacific Partnership, a trade agreement with eleven countries designed to pull export-focused manufacturing out of China (which is 78th on the Index). Former president Donald Trump removed the United States from the agreement and Biden has continued the policy of keeping America out of the agreement it negotiated in cooperation with Congress. Seven of the eleven countries in the TPP are in the top 10 of the Index, including the most recent member: the United Kingdom.
Staying out of trade agreements isn’t the only trade Facilitation barrier where the U.S. is penalized in the TBI. Usually, the European Union and China stand apart in adding new digital trade barriers- veiled tools to protect their markets from Silicon Valley competitors, and in the case of China, also to limit access to news and ideas from abroad. Yet, in the last two years the United States saw a flood of proposals caught by the Index that would moderate content online.
In a competitive world standing flat footed is a recipe for losing. By adding Digital Trade Barriers the United States started walking backwards. Biden officials have called for the end of the “free trade” era, have said trade agreements are outdated (20th century tools) and it’s time for a new “Washington Consensus” that marries trade and industrial policy. Clearly, other countries did not get this memo, as America “de-couples” and erects trade walls they are moving into a future marked by trade-openness, competition, and an America on the sidelines.