US Trade Policy: Plus Ça Change

Key Points

• As a presidential candidate, Joe Biden promised to reverse Donald Trump’s unilateral approach to trade policy, but two and a half years into his presidency, Biden has changed little of his predecessor’s trade regime, instead pursuing a “polite protectionism” that emphasizes social and environmental responsibility.
• A historical net exporter of agricultural products, the US has generally benefited from a system that recent presidential administrations have undermined by imposing tariffs on trading partners and blocking appointment to the Appellate Body of the World Trade Organization.
• The Biden administration should make good on its promises to reverse Trump’s protectionism, thereby expanding access to foreign markets for US agricultural producers.

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Introduction

After four tumultuous years of trade wars, abrogated trade treaties, and other unilateral trade actions taken during the Trump administration, there were hopes in the US agricultural sector that the trade policies of the incoming Biden administration would return to the multilateral approach to trade liberalization, which had characterized US trade policy since World War II. As a presidential candidate, Joe Biden promised a change from Donald Trump’s unilateral, oftentimes belligerent, approach to trade policy and a return to a more inclusive approach that would work with other trade partners within the global trading system’s rules—of which the United States had been a major architect.¹

Yet two and a half years later, trade policy under the Biden administration looks a lot like trade policy under his predecessor. While the open belligerence may be gone, the policies have largely remained in place, prompting James Bacchus of the Cato Institute to refer to Biden’s policies as “polite protectionism.”² Other assessments have been harsher. The Peterson Institute’s Gary Clyde Hufbauer refers to the “neo-mercantilist approach” of the current administration, which eschews trade agreements in favor of an industrial policy that shapes US industries over market forces.³

Trade is important for US agriculture. US agricultural exports topped $196 billion in fiscal year (FY) 2022, and while forecast to fall to $181 billion in FY2023, agricultural exports will remain the second highest on record, even after adjusting for inflation (Figure 1). The US Department of Agriculture’s Economic Research Service estimates that about 20 percent of US annual agricultural production is exported, and for some commodities, this percentage is far higher (Figure 2). For a commodity like soybeans, in which half of US production is exported and half of that goes to China, loss of access to that market can devastatingly affect prices and farm receipts, as we saw in the recent trade war.

The Biden trade policy has continued Trump’s policies in three crucial areas: (1) the continuation of the supplemental tariffs on steel and other commodities against China and other countries that have resulted in reciprocal actions against US agricultural products; (2) the failure to reengage in substantive market access negotiations with countries, specifically in the Asia-Pacific; and (3) failure to resolve the Appellate Body crisis at the World Trade Organization (WTO). Each area will be examined in the context of how it affects US agriculture.

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Notes

1. Joseph W. Glauber, “Trade and US Agriculture: What to Expect from the Biden Administration,” American Enterprise Institute, November 2, 2021, https://www.aei.org/research-products/report/trade-and-us-agriculture-what-to-expect-from-the-biden-administration.
2. James Bacchus, “Biden and Trade at Year One: The Reign of Polite Protectionism,” Cato Institute, April 26, 2022, https://www.cato.org/policy-analysis/biden-trade-year-one.
3. Gary Clyde Hufbauer, “Washington’s Turn to Neo-Mercantilism,” East Asia Forum, June 4, 2023, https://www.eastasiaforum.org/2023/06/04/washingtons-turn-to-neo-mercantilism.