As he girds for a rematch against Trump, the president’s ambitious trade agenda finally buckled under backlash from his own party. It may never recover.
The high-profile reversal in San Francisco was just the most recent setback in Biden’s trade agenda. U.S. officials have also hit a stalemate in their talks with the European Union to address the tariffs Trump levied on EU steel and aluminum when he was president — an issue key to Midwestern steel workers. The White House has also backed away from a binding trade pact the president pitched to Latin American countries in 2022; U.S. officials are now pushing a more modest, voluntary framework.
Those moves reveal that Biden and Democrats still fear that trade initiatives, even those framed as “worker centered,” could be an electoral liability in battleground states that Trump wooed with a protectionist message in 2016. Though Biden’s team has tried to differentiate its own policy to counter Trump’s agenda, members of his own party now worry those efforts will backfire at the ballot box.
“The politics on this are a bit less nuanced and more anti-trade than some folks in the administration had been thinking when they embarked on this endeavor,” said Peter Harrell, who led the international economics team on Biden’s National Security Council until November 2022. “At the end of the day the voter in Dayton, [Ohio], looks at this and says: trade deals have been bad for me, I don’t want more trade deals. This sounds an awful lot like a trade deal, and I’m against it.”
The administration insists its trade agenda isn’t dead. While trade was jettisoned from the Indo-Pacific talks, the U.S. still struck pacts with Asia-Pacific nations on supply chains, anti-corruption and clean energy, they point out. And Biden’s new global investment agenda — meant to counter China’s aggressive foreign infrastructure lending — also showed signs of progress late last year. Changing the paradigms of global trade is hard, they argue, and the U.S. has made considerable progress already.
“I think that what we are encountering is a resistance to change and a slowness to coming to the realization of what we’re trying to do,” U.S. Trade Representative Katherine Tai told reporters after the Indo-Pacific talks collapsed, referring to critics in Congress and on K Street. “But it’s happening.”
But outside of the administration, even Biden’s allies concede that the year-end debacle could be a fatal blow for the president’s global economic agenda this term. No trade issues are likely to be resolved with an election looming, they said, so if Biden’s team is to succeed in revamping the global economy, they may have to win reelection first.
“Today, it looks like trade is probably going to be a post-election agenda, and it will obviously look quite different depending on whether we get a Biden term two or a Trump term two” said Harrell. “I think it’s a shame because, while big comprehensive trade deals have never been first term president projects, I feel we should have been able to make some headway.”
A new-look trade framework
The Indo-Pacific deal counted on policy nuance to resolve political discontent with traditional trade pacts. The unpopular part of past global trade deals, Biden’s team reasoned, was that they encouraged job outsourcing by lowering tariffs and offering foreign competitors access to the U.S. market.