Washington, D.C. — The era of trickle-down, laissez-faire, free trade is over. As we look forward to a new era of trade strategy, a new Center for American Progress report makes the case for how a progressive, pragmatic approach to trade and industrial policy can reorient global production trends and reward high-standard markets and firms.
The approach to trade between the Trump administration and the Biden-Harris administration could not be more different. As examined in this report, the Trump administration failed to rebuild American manufacturing or reorient global supply chains. The trade deficit exploded during Trump’s presidency, and the United States continued to lose market share to China in key technologies of the future. Total manufacturing employment was lower when President Trump left office than when he started.
The Biden-Harris administration’s trade strategy is far more holistic than the Trump administration’s use of tariffs and corporate tax cuts. The Biden-Harris administration used tariffs strategically to protect the country’s manufacturing base from China’s predatory nonmarket practices and coupled that protection with targeted investments in American manufacturing and infrastructure, new procurement rules, tougher export controls, and a commitment to domestically produce the technologies that result from taxpayer-funded research and development. As a result, nearly 800,000 new manufacturing jobs were created in the past four years, and nearly a trillion dollars of private sector investment flowed into American manufacturing. This approach resulted in the trade deficit with China falling to the lowest level since 2010.
To build on this success, this report outlines a three-pillar strategy to usher in a new era of values-based trade. The three pillars of this new trade strategy include:
- A “standards-come-first” approach to market access. Trade policy should be defined by the simple idea that ambitious standards—including those for workers’ rights, climate action, respect for the rule of law, and a commitment to joint actions to counter the nonmarket practices of others—should be a precondition for preferential access to the U.S. consumer market.
- Increasingly assess market access at the firm level. Tariff rates should be increasingly based on firm-level decisions, allowing individual exporters to receive better rates based on how well they treat their workers, recognize the collective bargaining rights of their employees, protect the environment, and decarbonize their production.
- Align trade policy with a national industrial and investment strategy. Trade policy should be closely aligned with a national investment strategy, ideally coordinated with like-minded partners, to ensure that domestic manufacturers—and their workers—remain at the the forefront of the industries that will define the future, creating constituencies of workers and companies that benefit from trade rules that incentivize “race-to-the-top” behaviors.
“What is needed, both in the United States and elsewhere, is to create a new era of trade that accentuates the benefits of global commerce while ensuring that trade policy improves equality, increases supply chain resilience, brings prosperity to working people everywhere, and incentivizes broad industrial decarbonization,” said Ryan Mulholland, senior fellow for international economic policy and author of the report. “This is possible, but not without a clear rethinking in how trade policy is conceived.”
Read the report: “A Trade Strategy for the Post-Neoliberal World” by Ryan Mulholland
For more information or to speak with an expert, please contact Sarah Nadeau at [email protected].