How international trade could change under Joe Biden : The Indicator from Planet Money President-elect Joe Biden's inauguration will have massive implications for trade policy. Soumaya Keynes explains how Biden's approach to trade might differ from Trump's.
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Make Trade Stale Again

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Make Trade Stale Again

Make Trade Stale Again

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Hey, everyone. It's Cardiff. This is THE INDICATOR FROM PLANET MONEY.

For those of us who've been following global trade and especially U.S. trade policy, the last four years have been just wild. And that's, obviously, because of the trade wars that the U.S., under President Trump has been fighting, not just against China, which is a geopolitical rival to the U.S., but also against U.S. allies, with the U.S. putting in place tariffs on goods imported from abroad and then countries like China and our allies retaliating with tariffs of their own. And if I'm being honest, trade policy has been not just really combative during that time but also kind of unusually exciting. But pending some lingering legal challenges to the election, we are going to have a new president soon. So how will President Biden's approach to trade differ from President Trump's approach to trade? And so to help us answer that question and a few others is Soumaya Keynes. She's a trade and globalization editor at The Economist, and she's the co-host of the Trade Talks podcast with Chad Bown, another friend of THE INDICATOR. She joins me today.

Soumaya Keynes, welcome.

SOUMAYA KEYNES: Thank you for having me.

GARCIA: So one of your recent episodes of Trade Talks was about whether President Biden would make trade boring again. So I just got to ask, like, does boring sound appealing to you after four years of such hectic events in the trade world?

KEYNES: It sounds like a delight.

GARCIA: (Laughter).

KEYNES: I am looking forward to it an enormous amount, more than I would care to admit to my editors.

GARCIA: You'll certainly get more sleep that way. That's for sure.

KEYNES: (Laughter).

GARCIA: Soumaya, before getting into some details, I actually want to just start by asking how you think President Biden would differ from President Trump in his overall approach to making trade policy.

KEYNES: I think one really obvious difference is going to be that, whereas the Trump administration's policy was occasionally tweet first, work out the details later...

GARCIA: (Laughter).

KEYNES: The Biden administration is going to be much more deliberative, much more collaborative within the administration. There are going to be many more voices. One way of looking at it could be that, whereas the Trump administration saw trade policy first, foreign policy second, a Biden administration would see trade policy as just part of a much bigger foreign policy. And therefore, rather than trade tactics being fired out from random places, there might be something closer to an overall foreign policy strategy of which trade would be one part.

GARCIA: And, Soumaya, as I mentioned a second ago, the U.S. trade wars have not just been with China, which gets a lot of the attention. We've also raised tariffs on imports from our allies. So to take one example, there are now tariffs on steel and aluminum imports, which the countries in the European Union have been especially upset about. And the EU has, in fact, retaliated against the U.S. So how do you think the Biden administration would differ in how the U.S. trades with its allies?

KEYNES: I think when a Biden administration comes in, I think, perhaps, the president might be surprised at how often world leaders are going to bring up in conversation, hey, we've got these tariffs; please get rid of them.

GARCIA: Can you do something about that? Yeah.

KEYNES: Right. And so there are a few different things you can do. So on the steel tariffs, they're not racing to inflict lots more foreign competition on the American steel industry. There are pledges in there to buy more American steel when thinking about government contracts and so on. And so I don't get the impression that that Day 1, there's going to be this big removal of the tariffs with a great big flourish. That's not to say that you couldn't work something out. You could loosen up the exclusions process, so you basically - you would grant companies exceptions. You could renegotiate them so that they were a bit less painful for the foreign exporters, so there are things that the U.S. could do there.

GARCIA: Yeah, and there's also this wacky thing going on between the U.S. and France right now, where the French have said that they want to impose a tax on American Internet companies that do business in France, a so-called digital services tax. And the U.S. has said that it would respond to that tax with tariffs on French handbags and French cosmetics. What do you think is going to happen there?

KEYNES: It's possible that, actually, the Biden administration could inherit tariffs. It's possible that the Trump administration, on the way out, could go ahead and apply the tariffs. And so it wouldn't be a case of Biden deciding whether to put new ones on but what to do with tariffs already in place. And with that, I would imagine some kind of negotiation, perhaps, but the rhetoric coming out of France is not very conducive for a friendly tete-a-tete about how to resolve this.

GARCIA: All right, so buy your French handbags now...

KEYNES: That would be wise.

GARCIA: ...If that's what you're planning on doing. OK, let's take a quick break. And on the other side of the break, we're going to talk about the trade war with China and what Biden might do with the World Trade Organization.

OK, let's talk about China and the U.S. now. Obviously, the Trump administration has raised tariffs on a lot of goods imported from China as part of the trade war. China has retaliated. And at the same time, there is actually a lot of bipartisan support in the U.S. for being tough on China when it comes to trade. So how would the Biden administration approach trade with China in a way that's fundamentally different, if at all, from the way that the Trump administration has approached it?

KEYNES: There are a few things that, I think, would change. One would be that rather than taking a very unilateral approach, rather than saying, OK, the U.S. and China, let's just get in the boxing ring and sort this out, just the two of us, there would be more of an emphasis on bringing others on board.

GARCIA: So the U.S., for example, collaborating with other countries like Japan or the countries in the EU and negotiating together against China.

KEYNES: I think one thing that has possibly been overlooked is that when the Biden administration talks about working with allies, that probably means asking allies to do stuff. So far, it's been the Trump administration, you know, waving all the sticks, banging all the sticks, and everyone else has looked on, being like, how very unruly. But under a Biden administration, the Americans would be more likely to say, OK, well, come on and join us. If you're so worried about China, then you need to put some skin in the game here, and that means you need to be tougher too.

GARCIA: And my last question is about the World Trade Organization, the WTO, which, for listeners who don't know what it is, it's this global organization that - among other things, it exists to settle disputes between countries peacefully when it comes to trade so that a bigger trade war is avoided. But the U.S. has a lot of influence over the WTO, and the Trump administration has used that influence to weaken it in the past few years, to make it less relevant, for example, by blocking the appointment of judges to sit on the WTO's appellate body, which is the body that settles disputes between members, between countries. Do you think the Biden administration will reinvigorate the WTO and make it relevant again?

KEYNES: Yeah. It depends. The question for a Biden administration is, does it need the WTO's appellate body? How quickly does it need the WTO's system of solving disputes? In the short term, it might decide that, actually, it's OK just going off on its own and, in a sense, copying what the Trump administration did and launching all these investigations into other governments' trade practices; or it might decide that actually, no, that's not the way to do things but that the WTO's way of doing things before was a bit slow and a bit cumbersome. And you know what? For the things that they really care about, that process wasn't going to get them any results anyway. At the point at which the Biden administration decides, look; this thing is useful to us, then we can start having a conversation about how to fix old problems with the way that the system has worked. But given that some of those problems involve decisions that were made in the past, which other WTO members are actually quite happy with, resolving those differences is going to be really difficult and take a while.

GARCIA: Soumaya Keynes, thank you so much.

KEYNES: Thanks for having me.


GARCIA: This episode of THE INDICATOR was produced by Darian Woods and fact-checked by Sean Saldana. THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.


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