Presidential Preview: Trade

Editor's note: In advance of the 2024 presidential election, The Chronicle is breaking down each candidate’s stance on priority issues, examining their platform and political history to keep voters in the Duke and Durham community informed. This week, we take a look at trade:

The decisions of the next American president have the potential to determine decades of trade policy, with wide ranging implications for the economy and national security.

The presidential nominees of both major parties, Kamala Harris and Donald Trump, support increasingly protectionist agendas, representing major shifts in U.S. trade policy over the last nine years.

A dramatic policy shift

The last nine years have included the beginning of a U.S. trade war with China, the renegotiation of North American Free Trade Agreement (NAFTA) in 2020, the passage of the 2022 CHIPS and Science Act, new export controls and sanctions on states that have emerged as national security threats and a global turn away from free trade.

As Election Day draws closer, both major candidates have framed their campaign rhetoric around economic competition with China and domestic manufacturing, eschewing the free trade orthodoxy that dominated decades of economic policymaking and embracing protectionism to different degrees.

Free trade stood at the forefront of decades of American economic thought, with mainstream economists arguing that free trade allowed for greater specialization among countries, enabling greater global output of goods and services, lower prices and greater aggregate prosperity.

Opponents of free trade countered that competition would lead to industrial decline, job losses in less competitive areas of a country and overreliance on global markets and supply chains.

In 2015, then-presidential candidate Trump burst onto the political scene as a fierce opponent of free trade, arguing that countries like China had been stealing American manufacturing jobs and that free trade agreements such as NAFTA were responsible for economic setbacks in the Rust Belt. At the time, the United States’s trade deficit stood at $531.5 billion, with the country importing $2.76 trillion in goods and services and exporting $2.23 trillion.

Voter opinions

Polling shows Americans remain generally supportive of free trade, with 63% having a positive view of international trade as of 2021. As of 2022, 61% believe that trade is an “opportunity for economic growth,” with only 35% seeing it as a “threat to the economy.” 

However, Americans are not inclined toward eliminating all trade regulations.

A 2023 poll found 82% of Americans favored subsidies to manufacture semiconductors domestically, with only 29% in support of no restrictions on purchasing semiconductors from other countries. Nevertheless, 80% said trade benefited their standard of living, and 74% believed it was good for the U.S. economy.

Recent polling has not measured North Carolinian voters’ perceptions of trade as a standalone issue, although related issues of the economy and national security have been tested. A March poll from WRAL showed voters are highly concerned about the economy and national security, ranking them first and fourth, respectively. A March poll conducted by High Point University showed 92% of registered voters rated national security as a “somewhat” or “very important” issue for federal policymakers.

Donald Trump

Trump has long expressed opposition to unregulated free trade. As early as the 1980s, he accused other countries, particularly a then-surging Japan, of “taking advantage” of the U.S. and advocated for increased tariffs.

On the campaign trail in 2016, Trump promised to renegotiate NAFTA and impose a 35% tariff on all imports from China. Moreover, he made a point of opposing the Obama administration’s Trans-Pacific Partnership (TPP) trade agreement, which he withdrew from during his first week in office — a move widely perceived as upending the existing consensus in Washington.

Trump appointed several opponents of free trade — including U.S. Trade Representative Robert Lighthizer and White House Trade Adviser Peter Navarro— to senior positions in his administration.

The following year, Trump initiated the first of his promised tariffs on washing machines and solar panels. Then in March, he ordered a 25% tariff on imported steel and a 10% tariff on aluminum. The move, designed to protect a steel industry that had been forced to compete with cheaper Chinese manufactured steel for decades, ran into opposition from congressional Republicans and Democrats.

Economists forecast at the time that Trump’s proposed tariffs would do more harm than good, warning that a trade war was likely as China would almost certainly retaliate.

Throughout 2018, the Trump administration and China continued to enact tariffs. By the end of the calendar year, the U.S. had imposed tariffs on $500 billion worth of Chinese goods. 

The Chinese retaliated by placing tariffs on American agricultural products, particularly soybeans, that decreased agricultural exports to China by nearly $10 billion. China also targeted American-built airplanes and cars, among other products.

Intellectual property protections and alleged currency manipulation remained a sticking point for the Trump administration, who argued that ongoing Chinese IP theft was a national security risk and cost the U.S. at least $225 billion per year. Trump’s Treasury Department fulfilled a key campaign promise by declaring China a currency manipulator in August 2019. The administration’s crackdown on Chinese tech company Huawei, which it accused of IP theft that constituted a national security risk, led to China threatening to blacklist U.S. companies with a significant reliance on Chinese consumer markets. 

The countries held summits throughout 2019 in an attempt to de-escalate the trade war, with U.S. and Chinese officials meeting in May, July and October. However, the talks repeatedly failed, and both sides continued to enact additional tariffs. China began to feel the adverse effects of the trade war as economic growth slowed, exports decreased and consumers became less eager to spend.

In January 2020, Trump and Chinese Vice Premier Liu He signed a “Phase One” trade deal, signaling a significant thaw in economic relations between the two countries. China committed to buying an additional $200 billion worth of U.S. goods over the next two years, while the U.S. agreed to cut tariffs on $120 billion worth of Chinese goods. However, the deal’s effectiveness has been called into question as China failed to live up to its commitments, falling short of its import target by $173.1 billion in 2020.

U.S.-Europe economic relations were also impacted by the turn away from free trade. Following the enactment of Trump’s steel and aluminum tariff policies, the E.U. imposed a tariff on $2.4 billion of American imports in 2018. Trump subsequently threatened to tax European car imports.

In late 2018, the Trump administration successfully renegotiated NAFTA into the United States-Mexico-Canada agreement (USMCA), although it took over a year for Congress to approve the deal due to ongoing negotiations between Trump and House Democrats. Trump aimed to increase labor protections and bring manufacturing jobs back to the U.S. through the agreement, while Democrats pushed for stronger enforcement of labor standards, greater environmental protections and the elimination of a clause granting drug companies 10 years of IP protection. 

The finalized USMCA increased manufacturing requirements for automobiles by requiring 75% of parts to be made in signatory countries, strengthened labor standard enforcement, further liberalized agricultural trade between the U.S. and Canada and provided $600 million for addressing environmental issues.

The deal was projected to create 176,000 new jobs — 28,000 of which would be in the auto industry — and to grow the U.S. economy by $68.2 billion. All three countries were also barred from taxing digital goods and services. In a major victory for U.S. labor unions, Mexican labor laws saw significant reform through the agreement, a policy intended to prevent American workers from being undercut.

If re-elected in November, Trump has promised to impose an unprecedented 10% tariff on all imports regardless of country of origin and to raise existing taxes on Chinese imports to 60%. Economists have warned that the former president’s plan could spur inflation, cost Americans a total of $500 billion and fail to grow the economy as promised.

In August, Trump floated a 20% minimum tariff on all imports, which was again criticized for potentially resulting in higher prices for consumers. One estimate contends that middle class households would pay an additional $1,700 per year if such tariffs were to go into effect. Economists are concerned that costs to consumers may be even higher and that Trump’s proposal could cost approximately 675,000 jobs and raise the possibility of a recession.

Kamala Harris

During her 2016 campaign for the U.S. Senate, Harris opposed the TPP, citing concerns about its impact on California’s environmental laws and American workers’ job security. In 2019, the then-presidential candidate said she would not have voted for NAFTA when it passed Congress in 1994, expressing her belief that “we can do a better job to protect American workers.” She was one of only 10 Senators to vote against the final version of the USMCA that year, again due to her concerns about the environment and jobs.

Harris played up her pro-labor, pro-union credentials during her 2020 presidential campaign, stating in her platform that she would “enact trade policy that supports American workers” and give organized labor a role in trade talks.

In 2020, the Biden-Harris ticket launched a “Buy American” plan that included $300 billion for emerging technology research and development and $400 billion in federal procurement spending to support domestic manufacturing.

Once elected, the Biden-Harris administration implemented a “Investing in America” agenda through landmark legislation such as the 2022 Inflation Reduction Act, the CHIPS and Science Act and the 2021 Infrastructure Investment and Jobs Act. The White House’s trade agenda also included export controls designed to protect workers, national security and supply chain resiliency.

The IRA’s clean energy provisions created new trade tensions with European allies as Europe scrambled to respond to subsidies that would prove hard to match. “Made in America” qualification requirements for the $369 billion in IRA tax benefits incentivized European companies to move some operations to the U.S. — at Europe’s expense.

Notably, the Biden-Harris administration did not ease Trump-era tariffs, but rather adopted a more targeted approach in imposing new ones, such as by increasing tariffs on Chinese electric vehicles from 25% to 100%.

In 2021, the COVID-19 pandemic caused global supply chains to stall and break down, contributing to increased inflation and spurring new trade policy conversations regarding international supply chain resiliency and onshoring supply chains.

Following the Russian invasion of Ukraine in 2022, the administration imposed sanctions on Russia, including an embargo on oil imports. As the multilateral effort continued, Russia’s economy was gradually cut off from the West, with some states banning Russian vodka sales and the U.S. producing record amounts of gas and oil as global energy prices surged.

The Biden administration also ended Trade Adjustment Assistance in 2022, which funded job retraining for workers who lost their jobs as a result of free trade agreements.

Trade with China has remained a thorn in the Biden-Harris administration’s side, with both countries unwilling to make significant concessions. The administration has increasingly looked to India, South Korea and Vietnam as potential trading partners, while attempting to counter China’s growing footprint in Africa to fight for access to supply chains for raw materials for emerging technologies.

As of 2023, the trade deficit had decreased to $773.4 billion, with over $3.053 trillion in exports and $3.826 trillion in imports.

Although trade has not been at the forefront of Harris’ portfolio as vice president, she is expected to continue President Joe Biden’s multilateral, targeted approach to countering China.

Compared to Trump, Harris’ policy would not focus on intensifying the trade war, though she has criticized China for unfair trade practices and human rights abuses in the past.

It is also possible that Harris will prioritize the environment and will not focus on tariffs given her past criticism of Trump’s tariff-focused protectionism. Harris recently rebranded her Republican challenger’s trade proposals as a “Trump tax.”

Other candidates

Independent candidate Cornel West supports fair trade agreements to “lift all workers, not just those within [American] borders.”

Libertarian Party candidate Chase Oliver favors using trade as a “bargaining chip” and wants to protect free trade to “foster international goodwill.”

Green Party nominee Jill Stein’s platform states she would “replace corporate trade agreements with global fair trade agreements.”