Biden’s Agenda
The Steptoe & Johnson law firm issued a Client Advisory on US Trade Agenda in the Biden Administration.
- Free Trade Agreements. One of the few specific statements on trade policy that then-candidate Biden made during the campaign is that he does not intend to pursue free trade agreements (FTAs) until significant domestic investments have been made in the areas of healthcare, infrastructure, and education, among others.
- Trade Promotion Authority: Trade promotion authority (TPA), is currently set to expire on July 1, 2021. TPA, also known as “fast track” authority, restricts Congress’s ability to amend covered trade agreements by requiring an up-or-down vote, assuming that the President follows a prescribed set of formalities during the negotiation process. Congressional Democrats will press for greater recognition of social and environmental issues in the context of FTA negotiations, with an emphasis on achieving climate change goals and obtaining stronger worker protections.
- Trade Impacts of Domestic Investment/Reshoring: On the issue of domestic investment, the Biden Administration seems likely to prioritize the reshoring of US manufacturing, Buy American programs, and policies to strengthen US supply chains in areas that are critical to US competitiveness.
- The US-China Relationship: Over the past two and a half years, the Trump Administration unleashed a variety of new measures aimed at reshaping trade between the United States and China, most notably, the imposition of tariffs on nearly $370 billion in Chinese imports as a result of a Section 301 investigation into China’s intellectual property and investment practices. While President Elect Biden has not yet signaled what he intends to do with these tariffs, it is unlikely that the Biden Administration will simply remove them outright without seeking some kind of concession (trade-related or otherwise) from China in return. President Elect Biden will also inherit a number of other China policy challenges with trade and supply chain implications, including US concerns about state-supported competitors in the high-tech sector and imports produced with forced labor in Xinjiang. On these and other related areas, the Biden Administration will likely face bipartisan pressure from Congress to take decisive action.
- Bilateral Trade Relationships: While the substance of the Biden Administration’s stance toward China may not change significantly, its strategy is expected to differ. Whereas the Trump Administration adopted a series of unilateral actions against China, President Elect Biden will likely adopt a multilateral approach to addressing trade issues. This is in part a reflection of the President Elect’s more globalist approach, developed from his leadership of the Senate Foreign Relations Committee and his foreign affairs portfolio in the Obama Administration. This means that any further US negotiation with China on a “Phase Two” agreement addressing more systemic issues of concern to the United States will likely be shelved in favor of a multilateral approach.
- WTO Reform: The Biden Administration will also need to consider multilateral action with respect to the World Trade Organization (WTO). At least in the near term, it is unlikely that the Biden Administration will adopt a significantly different approach from that of the Trump Administration.
What Changed?
1: Free Trade Deals: Biden will not be in a rush for new deals. Trump wanted deals but was so confrontational he delivered nothing. No Change
2: Trade Promotion Authority: Trump did use Trade Promotion Authority to replace NAFTA with USMCA, but that switch accomplished nothing. Effectively No Change
3: Domestic Reshoring: Biden will promote made in USA. So did Trump. Manufacturing did not flood back under Trump and won’t under Biden either. No Change
4: China: Trump sought concessions from China and never got them. Biden will attempt to do better. But if he is hamstrung by climate change demands and worker rights issues he is unlikely to get very far. And in the absence of Trade Promotion Authority Biden will have a tough time threading a needle between demands of the Greens and demands of the Republicans. Change Remains to be Seen
5: Bilateral Trade Relationships: Biden will drop one-on-one confrontations with a multilateral approach. To the extent he needs cooperation from the EU, well that bickering could last years. Change in Style, Substance Remains to be Seen
6: WTO Reform: Steptoe says it is unlikely that the Biden Administration will adopt a significantly different approach from that of the Trump Administration.
I disagree. Trump paralyzed the WTO by blocking appointments to the seven-person panel for more than two years.
Bloomberg notes the WTO has been unable to issue judgments on new cases since December 2019 because there aren’t enough active members. Trump’s complaint is that the WTO evolved into a legal tool for nations to exert pressure on the U.S., and his top trade official called it a “litigation-centered organization.”
China desperately needs to stay in the WTO system.
Trump made it easy for China because no one wanted to go along with Trump’s self-serving demands. Then rulings stopped altogether.
Biden will make appointments and seek cooperation. That’s different.
If the US can get the multinational cooperation it needs, it may be able to force China to make changes. That is a big if, but it is more likely to succeed than Trump’s ever-escalating tariff policy that backfired.
Perhaps after dealing with 4-years of Trump’s threats and bullying, we will see better cooperation from allies.
If not, at least the threat of ever-escalating trade wars under Trump will be over.
Dysfunctional WTO
It’s important to note that the WTO was largely dysfunctional before Trump. He turned largely dysfunctional into totally dysfunctional by not appointing representatives leaving the WTO unable to investigate new trade claims.
Why was the WTO largely dysfunctional?
Two words: The EU
For decades the annual WTO trade talks broke down over agricultural policy. The EU was unwilling to bend on its protections. In return, third world economies would not bend on manufacturing and intellectual property issues.
Why wouldn’t the EU bend?
One word: France.
France will not bend and perhaps never will on agricultural protections. The EU is largely dysfunctional because of this.
US Role in the Mess
Trump wanted a comprehensive agreement with the EU that included agricultural policy. That was the end of it.
The irony in all of this is that next to France, the US is the most protectionist country on agricultural policy.
Look no further than the sugar lobby and ethanol policy. It makes no economic sense to produce ethanol from corn. It makes no sense to drive US candy manufacturers out of the US over sky high sugar prices.
But here we are.
Every year in the failed WTO meetings the US says it will bend on agricultural tariffs if the EU does. This is a cop-out.
Correct Trade Policy
The best practice would be to eliminate tariffs and slash corporate taxes no matter what any other country does.
Capital and jobs would flood in.
Nonetheless, any step back from escalating trade wars and perpetual bullying is a change for the better even if far from ideal.
Will Biden Be Better Than Trump?
Yes, for the simple reason Trump is one of the worst presidents on trade policy since Smoot-Hawley and the Great Depression.
Biden is likely to quickly work out an agreement with the EU over the Boeing-Airbus dispute. But that is a return to the status quo where both the US and EU offer the airplane manufacturers illegal subsidies.
Biden will be better in the sense that it is better to have a broken arm than two broken legs.
If you prefer a car analogy, Trump put global trade in reverse. Biden will return the car to park with a chance at low gear.
Biden is far more likely to make further gains in trade policy in the same way that 20% is far better than 0%. Don’t expect fast gains but welcome them if they occur.
Trump’s Failure
Trump tried to balance the trade deficit with tariffs. It was a fool’s mission as explained in Balance of Trade vs Gold Window
Also consider Trump’s Unwinnable Trade War: Gold Explains Why
Mish
So what do we expect of Biden? I guess you haven’t heard that Biden?Kamala will finally once and for all put an end to “Systemic Racism.
comments above under my and@Sechel ‘s posts.
so it’s ILLEGITIMATE JOE and his OBAMA minions again
sad sad day for former ONCE GREAT COUNTRY
US is protectionist on cotton too. In 2104, we paid $300 million to Brazil because they got a ruling against us with the WTO……and my understanding is that something like that could happen again.
Mish demystified:
Mish supports Biden but doesn’t have the balls to say so.
Keypoint: ‘‘The irony in all of this is that next to France, the US is the most protectionist country on agricultural policy.’’
No trading block is apt to abolish farming subsidies. Many in the EU don’t support the farm subsidies, but Europeans are adamantly against GMO and hormone/antibiotics based agricultural products. Eastern Europe has seen their ag sector devastated instead of flourishing from cheap exports. Don’t see Canada or Japan changing much either: massive political defeat awaits parties that do.
That is the problem with the free trade argument. It treats all products the same. A Gucci handbag exported has the same value as say processors and airplanes. The export of an app is counted as the same worth as pharmaceuticals. An internet influencer making 150K has the same worth as an engineer. Food is the perfect example. No reason ti grow it if you can buy it somewhere else for cheaper until something happens like a pandemic, a war of simply a country you export to decides it can do without that app, Gucci handbag. If your export can be cut off with a snap of a finger then it isn’t worth much because it isn’t worth much to the importing country. If you export then export things other countries can’t do without like Germany does.
Biden may do nothing and has 0 contribution to the country, but that is still better than what tRump has done which is big but Negative. My toddler told me that 0 is bigger than a big negative number.
So you voted for someone who you know will contribute nothing. Have you wondered why you voted for a party that that imposed on you a candidate who will not contribute anything? Aren’t you bothered by that? They have lowered your expectations so much that you now settle for someone who won’t deliver anything and the best part of it is that you like it. I suppose the next step is to impose on you someone who will do harm. That way you can be even happier.
can you first read what I said before you respond? Or may be you cannot read after all? Dois-je parler francais avec toi? It’s time to just accept that your cult leader has lost the election and move on.
Yes I read it and I was struck that your low expectations. Is that a personality feature? Half the country is in that cult if you define a cult as one of the two major parties. It took a worldwide pandemic plus incredible media bias, enormous amounts of money from banks, tech billionaires, drug companies and you still couldn’t get over the finish line without fabricating votes in your mafia-controlled dying cities. I would say that we are on the move. You are declining. On parle en français si tu veux. Peut-être ton raisonnement sera mieux mais j’en doute. On peut toujours espérer.
Pffff….. Your french pronunciation sucks….horrible american accent 😉 ! Doug is right, why would you put up with a utterly boring puppet doing absolutely nothing ? At least Trump was more fun, without the pandemic, outrageously taken advantage of by the Dems and their biased fake news media, Trump would ve won with a overwhelming majority, so there must at least be a few things he did fairly well…But have if your way, let the CCP dominate you even further…..Btw , thanks to Trump, Huawei is being banned in most european countries as far as the G5 network is concerned, and that’s a good thing !
The Democrats didn’t “take advantage of Covid”. Trump was dealt a win-win situation (Presidential support always rises in times of crisis), but he abandoned it in favor of the “I’m an idiot” position, and the Democrats didn’t have to do anything. Trump was the one who politicized it. What he should have done was form a bi-partisan pandemic response team, and stayed out of the middle of it, and nothing that happened could have affected him negatively. But, the lure of the spotlight was too strong, so he made the Covid response about him, and when the response was poor, it reflected poorly on him.
You Vlaam Bloker! get away from me!
I didn’t vote for “someone who will contribute 0” rather than a negative number, yet it’s hard to argue that it won’t be an improvement. Zero is definitely better than a negative.
Significant changes and explanations added to my post. Please refresh and comment
China ran circles around Obama. I expect the same. China is out to be a dominate the technology industries by all means necessary. Biden has already loss. He will not be tough. He is about unity. The U.S. will lose as we do not have a long term plan. China bends the rules and Biden will not enforce them as Obama did not enforce them. Face it. Biden does not know business.
So what did Trump do about China? Show me something numbers based and factual that Trump made better. From everything I see it only got worse and we pissed a bunch of people off in the process.
China ran circles around Trump.
Worse yet, Trump’s tariffs backfired
Tarrifs may not have worked. I agree. But the chip sanctions got China’s attention.
Unless you work for a technology company….you will not realize the amount of IP theft that is occurring. It is and should be a huge concern. I know of a company that gets hacked once a week. It is a health care related company that contains medical records of millions of U.S. citizens They just do hourly backups and restore the system. They have not been able to reach the records but they effectively shut the system down often via hacking. They have more than a hundred attacks a day from China.
I do not have an answer….but technology companies that make things need help from the government to protect their IP. Tech companies like Facebook, Snapchat, Google, etc….that rely on a service app and adversting do not. Companies like Qualcom, Intel, Cisco, HP, Texas Instrument, Microsoft need help.
I totally agree. Tech companies that make things are much more important to the US than than companies that just produce apps.
.Just Google chinese sanctions, bans, or lawsuits.
Huawei is the world’s biggest producer of telecommunications equipment.
“Huawei is effectively an intelligence-gathering arm of the Chinese Communist Party whose founder and CEO was an engineer for the People’s Liberation Army,” Cotton wrote in a statement.
Huawei is target of US criminal probe into alleged theft of trade secrets
17 Jan 2019
“If Chinese telecom companies like Huawei violate our sanctions or export control laws, they should receive nothing less than the death penalty – which this denial order would provide.”
WASHINGTON (Reuters) – The United States intensified its economic pressure on China’s Xinjiang province on Friday, imposing sanctions on a powerful Chinese company and two officials for what it said were human rights abuses against Uighurs and other ethnic minorities.
President Donald Trump said Tuesday that he signed legislation to impose sanctions on China in response to its interference with Hong Kong’s autonomy.
Trump also said that he signed an executive order ending the preferential treatment that Hong Kong has long enjoyed.
“Hong Kong will now be treated the same as mainland China,” Trump said during a lengthy speech in the White House Rose Garden that quickly drifted away from that legislation to touch on a variety of campaign issues.
BEIJING (AP) — U.S. President Donald Trump has stepped up a conflict with China over security and technology by barring Americans from investing in companies that U.S. officials say are owned or controlled by the Chinese military
Officials in the Trump administration are considering imposing further restrictions on major Chinese companies, notably the digital payment platforms of Ant Group and Tencent Holdings Ltd., according to a report by Bloomberg. These firms would join a growing list of Chinese technology entities that have faced economic pressure, sanctions, and bans in the United States including Huawei, ByteDance’s TikTok, and Tencent’s WeChat.
Biden? Trump will be the new dictator of this country in 2021. Republicans are going along with his coup attempt which will probably be successful. If you envision a future, you probably need to leave the US now.
Funny thing. Those who comment here are from all political sides and yet no one expects much out of Biden. The consensus seems to tend toward resignation rather than elation or despondency which is the normal reaction after an election.
Wrong. You are simply reading what you want to read.
Count the comments
That’s like getting your information from facebook. My dog can post a comment. It doesnt represent overall sentiment. This blog and its followers skews fairly right to begin with.
I think your dog does post your comments
What Biden said or thinks doesn’t matter. He lacks the capacity to formulate a plan on his own. The decisions will be made by the cabinet and VP. The cabinet hasn’t been appointed yet, so it’s difficult to predict what they’ll want.
He will appoint a bunch of Wall Street people for the economy, the Tim Geithner’s/Bern Bernanke’s of the world, is there any real doubt about that?
No doubt the Valerie Jerret’s/Susan Rice’s of the world will have influence, in other words Obama 2.0. I actually doubt the Kamala will have any real influence, other than locking people up in California(her only true claim to fame) what else has she done?
You will get more newness variability/outcomes rolling a pair of dice than you will from this administration, everyone whether they admit it or not, knows exactly what is coming.
I agree. It will be most wall street people who make money from the finance world. They do not care about technology, manufacturing, etc. They make money moving or managing other peoples money. Then when things go sour they ask the FED for a bailout.
It just goes to show that there is not a lot of difference between the Republicrats and the Demopublicans. The more things change, the more they stay the same. Yet, Trump was sort of dysfunctional, so I expect Biden to do more or less the same thing, but somewhat more efficiently.
The only thing that will really change American trade policy is when the USD loses its status as the global reserve currency, and when that happens, everything will change. When will it happen? Its hard to know. Probably not in the next few years, but almost certainly in the next 20-30 years. The US has a great deal, where we can have a high standard of living by trading bits in a computer for consumer goods, and while we can enjoy a world where government deficits and trade deficits don’t matter, but it won’t last forever.
The loss of reserve currency status is (a) not likely, because there is exactly no other currency that is better, or stronger. Nor is the US more indebted than most countries,,,,with some notable exceptions, like Norway.
You think the Krone will take over from the dollar? I don’t…look at how it trades.
and…(b) if the US does lose reserve currency status it won’t be some huge collapse, like Venezuela or Turkey…..it will be a relatively modest step down and it won’t be all at once the way the gold bugs think. When Great Britain lost the reserve currency stars, it happened over 20 years time……and last I check property in England is still pricier than property her in Texas…just sayin’.
I agree that it won’t happen any time soon, yet, the fact that other countries like Great Britain lost reserve currency status shows that it can, and does happen, and that reserve status is not forever. That’s why I guessed 20-30 years, but that’s certainly not a firm number; it could be 10 years, or 50 years.
I also agree that it won’t be the end of the world. Other countries that do not have reserve status function just fine. The biggest difference will be that debts, and deficits will matter.
Sorry for the typos.. Busy at work but wanted to respond….lousy typing skills.
Look at the real GDP chart…
1950 to 1980–all those years at virtually the same rate of growth (30 years)
1980 to 2010–all of those years at a higher (but constant) growth (30 years)
2010 to 2020–all of those years at a lower(but constant) growth(10 years)
2020 to ???–??
Now tell me again how much an individual President influences the economy
The big trend change in 1980 was the acceleration of the economy due to trade, automation, financialization, computerization.
The big trend change in 2010 was the recognition that the changes begun in 1980 could not continue to spin wealth out of nothing for the common folk.
Is 2020 a similar change, or just a deeper recognition that money cannot be spun out of nothing for the common folk and fewer and fewer components of the economy are viable?
As global consumer demand falls due to the demographics of aging in many countries, the US will be less affected by that than most, because we are not an economy that is dependent of exports….the way China is…or Germany is.
In the EU, France has the best consumer demographics for the next several years, from what I understand.
no wonder with all those Maghrebs breeding like crazy, as if their life depended on it ….well, it probably does…birth incentives, child allowances etc..
In this area you and I can agree. Unlimited immigration is not a net positive for mature countries at the top of the food chain. Not in Europe, and not here either.
But it’s late in the game to be changing anything….and the false narrative that says immigration is always good still has its proponents. This is one of the negatives of the new Biden administration. It’s a Democratic Party platform plank….
It is good for big tech billionaires like Gates…and the flagship universities use student visas to keep the pay in the toilet for college teachers……while US native PhD’s go unemployed. To me, this is a worse problem than taking on real refugees…who are willing to work long hours for low pay and do the ag jobs nobody will fill.
Democrats strategy for next 2 years in face of Republican senate blocking of agenda should be as follows:
Slashing corporate taxes doesnt do much except drive up the wealth of the billionaires and create more wealth disparity via the stock market. The real problem the US has is the currency is still the best house in an average neighborhood. Nothing can fundamentally change on trade because of the US consumer. The world is still competing for our demand.
For the moment it is just words and Biden uttered almost no words on anything to do with the economy except his usual platitudes during the campaign. Look at what his big donors want and those will be his policies. The banks gave a lot. What do they want? Tech gave a lot too. What do they want? Big business gave a lot. What do they want? These three groups are not in opposition to each other. Their interests converge so they will get what they want. My guess is Free Trade for one. No anti-trust or anti-competition investigations with teeth for another and for the banks continued expansion of their powers. Basically we go back to the Bush and Obama years. After all they didn’t do all this to change the way things are but to go back to what they once were.
This is exactly what will happen, back to the Obama doctrines, which I guess people have already forgot weren’t that great, that’s one of the reasons Trump got elected, the rich got super richer and the average person got much more in debt(especially student borrowers).
Please take a look at the wealth redistribution that has occurred since the trump tax cuts. If you think the US got more egalitarian under Trump you are insane.
Did I say we got more egalitarian? No I did not. Was employment going in the right direction? Were middle and lower class incomes rising rapidly? Were we kept out of unnecessary wars that sapped our economy, our savings and our young? Those are just a few questions I would ask you.
1. Employment was already going in the right direction under Obama. trump inherited an economy that was expanding. Trump repeatedly said the unemployment numbers were BS under the Obama administration, but then touted them under his. Trump’s approach to this virus will cost us more in long term employment than we may be able understand.
No, not rapidly. Many states have implemented baselines for minimum wage that helped to bring up the lower tier. whether thats the correct approach is still up for debate. I would love to see some trendiness of middle income wages rising “rapidly”.
Yes. Somewhat. We did not start any wars. Well not in the traditional sense. We have escalated tensions with Iran and China. Laying the groundwork for future conflict. Additionally, Trump has dramatically increased defense spending. Spending that could have gone to fixing our infrastructure or reducing our debt. And to what end?
After four years it still is Obama’s economy? As for the rest, take a look at the official figures from the US census bureau.
link to census.gov,and%20Table%20A-1).
He had to increase defence spending because 1) There is increased risk from China. There is no defence specialist who would say the opposite. 2) The wars in Iraq and Afghanistan worn down our equipment from airplanes to boots from overuse and their cost left little money to replace them. Obama left the armed forces in the worst condition for decades.
Tired of seeing raw wool go from England to feed the clothing industry of Flanders, Edward (1331 f.) lured Flemish weavers to Britain, and through their instruction established a textile industry there. Then he forbade the export of wool and the import of most foreign cloth. By the end of the fourteenth century the manufacture of clothing had replaced the trade in wool as the main source of England’s liquid wealth and had reached a semi-capitalistic stage.
We all like to come down on Trump for being a narcissist and and absolute joke due to his personal antics, however we miss the fact that while misguided and frankly probably due to ego issues, he actually tried to do something on China, the Chinese tried to play him with that state visit early on but it didn’t work, Trump still kept pushing them.
There is no current viable military solution to China that doesn’t involve large casualties on both sides, so all this business about Biden being tough militarily on China is bullshit and they know it, yeah we can parade around the South China Sea all we want but to actually get real results would require much much more than that. No one wants to go there so it’s off the table, any of these proposed “solutions” are bullshit.
The real area where the U.S can have an impact is on trade but this would affect the fat cats in the U.S such as Warren Buffet/Wall Street/Etc. Trump got played on trade by the Chinese via their promises to buy ag products in the billions to help his re-election, but trade/economics is the only real lever the U.S has over the Chinese at the moment. The have played the last two presidents like a fiddle Trump/Obama and there is no reason to expect they won’t play Biden.
He had a bank account in China that was linked to the government. You can say whatever you want but in the end we know Trump was not for America first but Trump first. You’ve been duped if you think otherwise. Your post above makes me believe you think Trump is some of chess grandmaster. He’s not. Trump did next to nothing for most Americans when it came to trade.
I don’t understand the fear over China anymore. Even before Trump, trade with ASEAN countries outside of China was increasing while China was losing leverage in the trade relationship.
I think Biden will crack down the IP theft like most presidents have tried to do but it will be a multipronged approach including offensive cyberattacks if necessary.
Why wouldn t Trump have a bank account in China ? He rents property there, so what s the big deal ?
You will have to tell me what other presidents did to try to stop IP theft. They left it up to each individual company to try to stop it. I worked for a company that tried to stop it several times during Obama. No help at all.
Apparently Russia has a Covid vaccine that actually works. South Korea purchased 150 doses. Hungry is giving middle finger to EU which is trying to stop her from using Russian vaccine. Pfizer vaccine isn’t feasible for widespread use do to logistics of expensive super deep cold storage it requires, although Pfizer thk it can eventually figure out a fix for that.
Democrats strongly favor labor. That’s how we got the blue wall back and Biden will do everything to keep that wall. Trump set us up beautifully to go full protectionist for organized labor by gutting the long standing Republican position on free trade. You are correct Mish that Biden is not going to do anything for free trade. I suggest that He will implement more protectionist policies and he will push immigration numbers even lower. Obama deported more than 3 million. Biden will keep ICE going strong. He won’t use racist and hateful rhetoric like Trump does but organized labor doesn’t like immigration as most Americans don’t. Expect declines in free trade and immigration. That’s my prediction.
A bilateral trade agreement between the U.S. and the U.K. is dead now. Biden has been clear he values the Good Friday accords and has warned Johnson on this front. While Biden will respect and value the strategic defense treaty between the U.S. and the U.K. Biden will be looking more to the Continent on trade.
Biden is already signallling that he will stick wiht our Asian allies more for defense. He’s already signaled the U.S. Japan defense treaty includes the Senkaku islands. Trump’s been America alone. Biden will be more traditional valuing relatinships and alliances.
As far as China and Asia trade. Both progressives and Trump have been against free trade. I suspect Biden will walk from Trump’s carousel tariffs and not engage in a tariff war I doubt we’ll see a quick unwinding of Trump’s tariffs either. At the very least Biden will de-escalate with China. I further suspect he’ll be tougher when it comes to the military than on trade which is fine with me. The only legitimate issue in my view is the theft of intellectual property.
TPP still won’t happen. That’s dead.
I agree on reshoring being a priority but I think this is a waste. It won’t happen for reasons having nothing to do with who is President. The way to make America competitve is to make America a better and more productive place to locate a business. Taxes are really only a small part. An educated work force and good infrastructure can matter just as much if not more. For some industries the U.S. lacks the infrastructure to support the industry at present.
“I agree on reshoring being a priority but I think this is a waste. It won’t happen for reasons having nothing to do with who is President. “
I have to respectfully disagree with that……reshoring will happen…..but also for reasons having nothing to do with who is President.
It will happen because the cheaper available US energy will make most manufacturing industries see savings in reshoring….and because, going forward, global consumption will go way down in most places, including China and Europe…..due to strong demographic trends that are irreversible. We will see good consumption continue here and in Mexico, because both countries have a millennial demographic with the usual trajectory of high consumption during their child raising years.
Mexico will emerge as our best trading partner and our best export market.
On the rest of it, I think Mish is spot on…..not a lot of change. Trade policy is likely to be less globalism and more isolationism, for the same reasons I just mentioned…and because the US no longer has so many reasons to be the world’s policeman and global hegemon.
The entire world has been able to engage in global trade because the US Navy has ruled the oceans and made unimpeded free trade possible…. for the last 75 years, and if we aren’t doing that anymore, globalism as we have known it for most of our adult lives is not likely to continue.
No “clean energy” (unless you count nature gas) is anywhere near as cheap as oil. Moves to cleaner energy are necessary, but will be driven by climate change and a real need to lower carbon emissions. But so far it is not a low-cost alternative or an green future that is driving oil down…..it is demand destruction…caused by consumers driving less, primarily.
The idea that oil will “drive desirable inflation” is DOA…it is doing precisely the opposite of that now, and that trend will stay with us…it’s a permanent change, a real sea change in economics…that needs to be recognized.
Yes, it is of strategic necessity to return some kinds of manufacturing to the US…..but compared to forces that will be driven by falling consumption in China and Europe as the populations in those places age out….it’s a small piece, imho.
Thanks for your thoughts..
Mish, I feel safer now that I know Japan is helping defend the US. The last guy to fire a weapon in combat there is about 95 years old now.
The real problem for the counter-party to any agreement–trade or otherwise–is that they now know that any agreement reached by one administration may last only for the remaining duration of one 4 year term.
Mish – Biden has already stated in a Foreign Affairs essay that he intends to return to the Trans-Pacific Partnership. It will take a few months to start this process again. Agree with the multilateral approach.
Despite former U.S. Vice President Joe Biden’s defeat of incumbent President Donald Trump in the presidential race, it appears increasingly unlikely that Washington will return to the Trans-Pacific Partnership anytime soon, as expected by Japan and others.
During the presidential campaign, Biden did not mention any plan to bring his country back to the TPP as he was emphasizing the protection of domestic industries.
The United States, Japan and 10 other countries reached an agreement on the TPP during President Barack Obama’s time in office, but Trump pulled the U.S. out of the free trade framework just after taking office in January 2017.
The Obama administration had hoped to use the TPP as a means of checking China, and there are hopes within the Japanese government that the United States could eventually return to the TPP as part of its strategy against China.
Still, it seems difficult for the United State to make an immediate about-face on trade policy after a Trump administration-brokered U.S.-Japan bilateral trade pact took effect early this year.
from Foreign Affairs March/April 2020 – Why America must lead again, rescuing foreign policy after Trump:
“The United States does need to get tough with China. If China has its way, it will keep robbing the United States and American companies of their technology and intellectual property. It will also keep using subsidies to give its state-owned enterprises an unfair advantage—and a leg up on dominating the technologies and industries of the future.
The most effective way to meet that challenge is to build a united front of U.S. allies and partners to confront China’s abusive behaviors and human rights violations, even as we seek to cooperate with Beijing on issues where our interests converge, such as climate change, nonproliferation, and global health security. On its own, the United States represents about a quarter of global GDP. When we join together with fellow democracies, our strength more than doubles. China can’t afford to ignore more than half the global economy. That gives us substantial leverage to shape the rules of the road on everything from the environment to labor, trade, technology, and transparency, so they continue to reflect democratic interests and values.”
OK – I overspoke a bit on this as the TPP isn’t specifically mentioned, but that was the original purpose of the TPP so I don’t think I’m too far out in left field. Also, from The Hill 7/31/19 – Biden would renegotiate TPP:
“During the second Democratic presidential primary debate, Biden said he would not automatically rejoin the trade agreement that former President Obama’s administration negotiated and President Trump withdrew from.
“I would not join the TPP as it was initially put forward,” Biden said. “I would insist that we renegotiate pieces of that with the Pacific nations … so that we could bring them together to hold China accountable.”
Which is consistent with the FA piece above.
Of course, the really big danger is that a negotiated deal focuses almost exclusively on human rights and environmental issues at the exclusion of economic ones. In the current social justice climate, that gains Biden a domestic win, even though it creates a net loss for the US. Biden as a career politician is a pragmatist, and will take what is possible, kicking the can down the road to a Harris presidency or further. China will probably recognize this and aim for this strategy.