White House's Headless Trade Policy Will Induce Congress-Hooked Protectionism

When the Biden administration first announced its Trade Policy Agenda in 2021, trade was supposedly an “essential component” of their flagship Build Back Better agenda to revitalize the American industrial and innovation base. More than three years later, the administration’s trade policy has created dissatisfaction at home—including within President Biden’s own party, limited progress in its global agenda and has led to no movement in its bilateral engagements. With de-facto discontinuation of trade negotiations in the Asia-Pacific and a transatlantic trade and tech partnership that may not survive after November, the administration cannot seem to present any durable trade deliverable—in action or in negotiation—that helps ensure market access or eliminate trade barriers for U.S. exports, i.e. “leveling the playing field” and “build up strength at home” for American workers.

Admittedly, President Biden has presented some signs of sporadic progress recently, the most publicized of which is the continuation and expansion of Trump-era Section 301 tariffs on Chinese goods. However, a closer look reveals that the supposedly assertive tariffs address a very small segment of U.S. concerns—and not very effectively at all. The expansion of the tariffs mainly focused on two sets of the sectors: (a) steel, aluminum, semiconductor and electric vehicles etc.—where Chinese goods currently constitute a small percentage of total U.S. imports; and (b) solar cells, batteries and critical minerals etc.—where Chinese goods enjoy global market dominance. Despite the publicity and official narrative, it is questionable whether either set of tariffs is able to truly address core U.S. concerns and support the interests of U.S. industries and workers in global trade. Furthermore, the decision to continue Section 301 tariffs occurred after the administration’s own review admitted that the tariffs have not only failed to elicit “systematic and sustained” changes to problematic Chinese practices but instead provoked even more persistent and aggressive measures that “burden or restrict U.S. commerce.” 

What’s missing behind the Biden administration’s trade agenda and actions is a coherent vision for the global trade order, one that is equipped with clear objectives and practical thinking. The Biden administration has long called for changes in global trade while continuously enforcing the paralysis of the WTO Appellate Body, which begs the question: As the administration calls for the “revamping” of the current global institutions, does the United States seeks new trade rules that are nevertheless compatible with the WTO principles and thus complementary to the existing regime of global economic governance? Or rather, does Washington intend to overthrow the WTO system and build a new order based on its self-chosen new fundamentals? If it is the former, the U.S. needs to actively work to revive the WTO dispute settlement system. If it is the latter, Washington must first ensure whether and how it can build up enough momentum and support for what could truly be ‘Globalization 2.0.’

Regardless of Washington’s choice, one thing is certain: the United States must provide an answer and move beyond the mere identification of problems. In the new era of strategic competition, mere restatement of concerns—be it the unfairness of the WTO dispute settlement system or China’s “non-market practices”—is insufficient to secure the interests of American industries and workers. The need is especially pressing as China has already proceeded with its own active policies, be it the up-and-running Regional Comprehensive Economic Partnership to the recently proposed ROK-Japan-China Trilateral Free Trade Agreement.

Domestically, the U.S. legislature will step in if the executive branch cannot convince U.S. lawmakers that their constituent interests are truly protected. In fact, U.S. lawmakers are already growing anxious over the administration’s “inaction” on trade as well as the persistent lack of congressional consultation and transparency on important trade matters. On September 14, 2022, during a hearing on U.S. trade policy with Taiwan, then Ways and Means Chair Rep. Richard Neal (D-MA) started the full meeting with the statement that Congress has the “exclusive,” constitutional authority to regulate foreign commerce, preceding a series of tensions and legislative complaints that the executive branch kept Congress in the dark on trade. On April 12, 2024, Rep. Carol Miller (R-WV) and Rep. Darin LaHood (R-IL)—who had resorted to traditional legislative-executive coordination on Indo-Pacific trade negotiations at the beginning of the Biden administration—criticized the administration’s “inaction on trade” and called for the establishment of a new independent commission to  “reassert Congress’s authority over trade” and design the nation’s Indo-Pacific economic strategy. The bill received support from a bipartisan group of senior lawmakers.

Although the stepping-in of their legislative representatives could sound hopeful for American workers, it is questionable whether the lawmakers have the political will or institutional capacity to enact a balanced trade strategy by themselves. In the past few years, legislative momentum has advanced most easily when it comes to unilateral measures that tighten import restrictions, e.g. the de minimis reform and further reform of U.S. trade remedy laws. Meanwhile, the road to sustaining low import barriers even in less contentious areas, e.g. the reform and reauthorization of the Generalized System of Preferences, has proved to be bumpy, albeit hopefully navigable afterall. In contrast, even bipartisan, bicameral calls for the United States to initiate trade negotiations, e.g. on digital trade, quickly faded into non-action and disputes as the administration turned its political attention to contentious issues such as data localization and cross-border data flow rules. Despite Congress’s constitutional power to regulate foreign commerce, Congress is ill-equipped to deliberate and decide the nuanced terms of market access negotiations, let alone carry out the diplomatic work to reform or replace the existing global trading order. 

When Washington had still focused on trade liberalization, the U.S. executive and legislative branch maintained their balance and coordination on trade policy through the Trade Promotion Authority mechanism, where Congress sets the objectives and priorities for trade negotiations and the administration obtained relative latitude within these perimeters. Nevertheless, such a framework no longer applies in the era of strategic competition, especially when Washington lacks consensus on what the United States wants with regard to the global economic order. Thus, in addition to deciding the United States’ contemporary vision for global trade, Washington must also find ways to establish a new internal mechanism to agree on and implement its trade policy—and ensure coherence between legislative and executive actions.

In a world where either is not achieved, Congress will be willingly compelled to take the driver’s seat to outline U.S. trade policies. As U.S. lawmakers are unable to present and push through new initiatives that can solve U.S. concerns about global trade, U.S. lawmakers will be forced to compensate constituent industries and workers by stepping up import restriction measures. The result: The United States will swing further towards protectionism—not out of sound policy thinking, but out of unconscious and uncontrolled political momentum. The international community will surely suffer as the world’s greatest economy embraces its economic Monroe Doctrine. Meanwhile, Washington will lose the increasingly small window of opportunity to demonstrate American economic leadership and responsibility in the new era of strategic competition as it turns away from—instead of reshaping and reforming—the very international economic order that the United States built up decades ago.

As the nation chooses its next leader in the following months, and as the respective teams work their way to show their vision for the United States and U.S. global leadership, all stakeholders and policymakers should take care to avoid this lose-lose scenario.