Election 2024: What’s At Stake When It Comes to Trade?
The fast-approaching November presidential election has opened up questions about the future of global trade.
With President Joe Biden stepping down as his party’s nominee, the American electorate and the country’s many industries have been left to read tea leaves when it comes to his prospective replacement’s trade policies.
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Where will a Harris-Walz ticket land on China tariffs and free-trade agreements?
And should team Trump-Vance prevail, will the administration move forward with that controversial “All Tariff Policy”?
There’s no way of knowing, of course, until these issues are potentially laid out during a series of September debates—and really, until the incoming administration settles into the White House.
“I think we can expect from a potential Harris administration a lot of continuity with the Biden administration’s trade agenda,” said Josh Teitelbaum, senior counsel for international trade policy at Washington, D.C. law firm Akin.
“Through her Senate career and in her role as Vice President, she has not staked out a significant departure from the President’s so-called worker-centered trade agenda, and in the broader Democratic set of priorities, trade has taken a back seat the last four years as Democrats focus on protecting reproductive rights, infrastructure, the care economy and issues like paid family leave,” he added. “The consensus around trade, policy has shifted from one of competition to protection.”
According to Teitelbaum, Harris’ roles on The Hill and in California as district attorney and attorney general haven’t pushed her to develop the trade policy chops that the incumbent president has during his half-century in Washington. But there are clues to how she might approach trade in some past decisions.
As a senator, she voted against the U.S.-Mexico-Canada Agreement (USMCA), and was “one of small handful of senators” who did so, “arguing that its environmental protections were not strong enough,” the lawyer said. “As we look ahead to next year, if she were to win, we could see a greater focus on climate and the environment; in some respects, that actually represents a little bit of continuity, because I think that’s where the Biden administration trade agenda was headed.”
Meanwhile, “With the pick of Governor Walz, you have somebody who reinforces Democrats’ historic skepticism of free trade agreements. He voted against a number of free trade agreements from the Bush and Obama eras when he was a member of the House,” Teitelbaum said, noting that his stance was usually in line with that of labor unions who didn’t see the FTAs as beneficial to American industry. “As a governor he has also staked out some fairly progressive positions with respect to climate and the state of Minnesota’s obligations and uses of renewable energy, so there’s a lot of alignment between the top of the ticket and the bottom of the ticket on trying to attack climate change,” he added.
But when it comes to renewing old and expiring agreements, like the Africa Growth and Opportunity Act (AGOA), which has enjoyed more than two decades of broad, bipartisan support, Teitelbaum said the Commander in Chief may have to intercede. President Biden has made his stance on AGOA crystal clear, stating on multiple occasions, including before last month’s AGOA Forum, that it should be renewed expeditiously.
“I think it’s going to take a push from the White House to overcome this Congressional gridlock and really prioritize the reauthorization of AGOA right now,” Teitelbaum said. “There is bipartisan legislation to reauthorize AGOA in the Senate right now for 16 years. Congress could move it quickly, but there are people interested in trying to undertake a more comprehensive modernization of the program,” he explained. “I think Congress is going to need the deadline of reauthorization in order to act, instead of acting along the timeline that the users of the program need.”
Ram Ben Tzion, co-founder and CEO of digital vetting platform Publican, which helps customs agencies with digital inspection of shipment documentation and authentication, said he believes “it’s safe to assume the continuation of the policy of the current administration with a future Harris administration.”
“It will be more of the same—but there will be more; it’s not going back,” he clarified, noting that Harris is unlikely to roll back Section 301 punitive duties imposed by former President Donald Trump and maintained by President Biden, and could choose to double down on the trade action.
“When it comes to a Trump administration, we can expect… new radical, high-impact, high-visibility measures, and a focus on e-commerce,” Ben Tzion said. “With President Trump and his running mate, J.D. Vance, they’re very vocal about China.”
He believes a potential second Trump administration would “take immediate action that would dramatically change the landscape and affect millions of people across the states by sanctioning or boycotting Temu, Shein, Alibaba, and all these entities that don’t play by the same rules as Amazon.” Trump has been vociferous about hitting back at China’s leading e-tailers, which are blanketing the U.S. market in hundreds of thousands of de minimis shipments each day.
Ben Tzion said he’s skeptical of Trump’s tariffs-all-around proposal. “A unified tariff system… will have very limited impact, if any, because obviously the Chinese have been very smart about routing their products through proxies and third parties to overcome these tariffs and trade agreements.”
It’s something Publican’s clients are especially concerned about, given the deepening focus on forced labor in the supply chain. “What most of our customers today are looking for is visibility. They want to know if down the supply chain, in the second, third, fourth tier, are they buying from somebody who is somehow linked to Xinjiang, China?”
“China is building capacity across Latin America in order to leverage existing trade treaties between the U.S. and Latin American countries and bypass or overcome all these trade restrictions,” he added. “Mexico is obviously the biggest one, and the surge in trade with Mexico is fueled by this phenomenon. But it’s not just limited to Mexico, you’ll probably find comparable examples across the continent.”
This is an area where Publican is especially focused, “because ultimately, it’s our responsibility to be able to tell our customers and the government the true origin or source of each and every product—it doesn’t matter if the last mile is in Mexico, El Salvador, Honduras, etc.”
Regardless of who takes the oath of office, Ben Tzion believes the focus on traceability and verification will only grow as the trade landscape continues to become more complex.
“We are seeing the need for better scrutiny of the supply chain and the legitimacy of sources,” he said. “And I think that this will continue down the road, not just because of U.S.-China, because of a broader set of circumstances in which trade has been overlooked in terms of compliance—but that is changing now.”
There are also a number of nations that have emerged as surrogates to China, and Publican is keeping a watchful eye on how those trade relationships progress, and whether they could be incentivized by new FTAs.
“There are a lot of countries out there that realize that U.S.-China open trade is not going to continue the same way, and they’re trying to build an infrastructure as an alternative,” the CEO said. For the fashion industry, the landscape includes Taiwan, India, Bangladesh and Sri Lanka. “I think a lot of governments there see the potential in becoming an alternative production source.”
Pawan Joshi, executive vice president of products and strategy at supply chains software firm E2open echoed the importance of “plus-ones,” or third countries that allow American brands to offset some reliance on China.
“There’s a recent push towards the importance of labor conditions, towards where the material is being sourced from, and the conditions in which that material was produced,” he explained. “And oftentimes the source is four, five or six tiers removed, and that’s where trade is actually bringing in more and more complexity in the picture.”
Joshi also pinpointed Mexico, Vietnam, India, Sri Lanka, Bangladesh as the most notable alternatives to China sourcing.
That may make the next administration more amenable to working symbiotically with those nations. But the explosions in growth also make their industries much more susceptible to Chinese influence and to being cultivated as intermediaries to ferry goods into the U.S. market, which could potentially lead to more scrutiny or even sanctions.
“This was how trade was going back to the Cold War—not at the same scale that we are now, because we are way more globalized than we were—but there were these non-aligned countries that were actually facilitating movement of goods between those two blocks that never agreed to trade together,” he explained.
“When the Cold War ended, the ‘plus-one’ country needs went away because we were talking to each other and it was much more open, much more capitalistic, and people absorbed that. Now you’re going back to that polarized world, and the relevance of ‘plus-one’ comes in.”
U.S. companies have been exploring other options for some time, but on the whole, they haven’t divested from China, even if they have reduced their reliance on the country known as the “World’s Factory.” That’s an objective that can only come with time and investment, Joshi believes
“The practical constraints that exist in our supply chain are not going to go away… no matter how much we talk about it, no matter how much we impose constraints and duties and tariffs,” he said. “The fact is that if you’ve invested 15, 20, 30 years in some cases to build infrastructure in certain part of the world, you can’t just within a matter of months or years flip that over and lift and shift.”
Irrespective of who comes [into office], I think that dynamic will exist,” he added.