Who would run US trade policy in a Joe Biden administration?

Who would run US trade policy in a Joe Biden administration?

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Hello and welcome back for another issue from Washington DC. Tonight we'll have the pleasure of watching the second and final debate between President Donald Trump and Joe Biden – organizers have promised to use their mute buttons to avoid interruptions. We'll see if they get through.

Given the economic shock of the pandemic, trade was less of a factor in the 2020 campaign than it was four years ago, but it is still very important to voters in some swing states. Aime Williams wrote a great piece on Michigan political dynamics earlier this week, highlighting how mixed the evidence for the president is.

It is not up to us to guess who will win the White House race – and Trump could claim one more victory – but let's assume he will lose to Biden and make informed speculations about who will then conduct his trade policies could. Today's main piece investigates potential candidates for the U.S. sales agent job: a role less well known than finance, government, or defense directors, but which can be just as critical.

The Chart of the day considers the US-China import price inflation during great stories of trade The facts are checking manufacturing employment statistics ahead of today's debate. You're welcome.

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USTR runners and drivers

Biden hasn't even won the presidency yet, but speculation about his likely cabinet in Washington's virtual corridors and zoom chats is already well underway.

When it comes to the work of USTR, we've already written that there is a small, but not trivial, chance that Biden would want to keep Robert Lighthizer on board. He has a relatively good relationship with Democrats on Capitol Hill, knows the details of all of Trump's trade wars, and has not ruled out accepting another residency.

But the alternative – Biden making his own choice of the new chief commercial officer – is more likely. The decision will be far from easy: the former vice-president is facing a violent tug-of-war between the progressive and moderate wings of his party on important appointments, and any misstep could get him into trouble.

“For democratic politicians, trade is controversial. They want someone who is acceptable to work (unions) but not an abomination to business as the latter is instrumental in getting them to reach agreements through Congress. This is also a position that the party's progressive wing will be closely monitoring to ensure that the Commissioner is not a lobbyist, ”said Bill Reinsch of the Center for Strategic and International Studies. "After all, don't expect a seated Senator, or at least a Democrat. Biden needs each of them to stay in the Senate."

In this context, it can make sense for Biden to select a Democrat from the House of Representatives who is familiar with balancing the different opinions and interests on trade within the party. Possible candidates are Ron Kind from Wisconsin, Stephanie Murphy from Florida and Jimmy Gomez from California. Each of them is a member of the House Means and Ways Committee, and each has increasingly spoken out in favor of trade in recent years.

Tom Perriello is a potential candidate for the role of chief commercial officer if Biden wins the election. © Molly Riley / AP

There are other options with Washington experience. Tom Perriello, a former member of the Virginia House of Representatives, is a name that circulates along with Mike Wessel of the US-China Economic and Security Review Commission of Congress. Former US sales reps like Jennifer Hillman, Miriam Sapiro and Fred Hochberg could also be there, Reuters reported last month.

There are also some plausible candidates from across the Beltway. Pete Buttigieg, the former mayor of South Bend, Indiana, who ran for president but has since been an effective replacement for Biden and sits on his transitional advisory board, might stand a chance given his experience dealing with the effects of globalization on a medium – big city in the midwest. John Kasich, the former Republican governor of Ohio who left for Biden and spoke at the National Democratic Convention, is under review, according to Politico, to serve as an option in his possible administration with USTR.

Anyone who accepts the job faces major challenges. Tackling the trade conflict with China that Vice-presidential candidate Kamala Harris has already accused Trump of losing is probably the most important. De-escalating economic tensions with the EU and possibly reaching an agreement with the UK is clearly another priority.

A third way to restore US leadership and credibility with the World Trade Organization is a third. Finally, the Trade Promotion Authority – the administration's approval to negotiate trade deals more effectively – needs to be renewed next year. Even without a president making abrupt political announcements via tweet, these won't be an easy task.

Mapped waters

Import price inflation for plastic goods coming to the US from China has risen sharply since the middle of the year (imports of clothing and furniture are still in deflationary territory). This could be because tariffs are fully priced in and Chinese exporters no longer share the burden. It is unclear what the US presidential election outcome will mean for the simmering trade war between Washington and Beijing: Despite Trump's rhetoric, some analysts believe Biden's multilateral foreign policy approach for China may prove to be more difficult in the long run.

Line chart of the rate of inflation in% year over year showing the inflation of US import prices: Imports from China

Great stories of the trade

An auto worker in Marysville, Ohio. US manufacturing employment is now back at mid-2014 levels © Ty Wright / Bloomberg

Given that the next election debate is tonight, we thought it useful to pre-check a classic Trump claim. Before the outbreak of the pandemic, Trump often stated that he had led a "blue collar boom" – and even afterwards, for example during a visit to Ohio in August, he spoke of a "manufacturing miracle". So we wouldn't be surprised if he said something similar tonight.

But what do the numbers tell us? When Trump took office, there were 12.4 million manufacturing jobs in the U.S., an increase of 3.2 percent since Barack Obama's second term began. At the time of the pandemic in February 2020, employment in the manufacturing sector had risen to 12.9 million, a rate of 3.9 percent. So Trump can really claim that he created industrial jobs faster than his predecessor.

But fast forward to the present, wrapped up in the botched response to the pandemic, and it's a different story. As of September 2020, the US manufacturing employment was 12.2 million after wiping out all the profits and more made during the Trump administration. In fact, it's now back to August 2014 levels. It's also worth noting that nearly all of Trump's manufacturing job gains were achieved during his first two years in office, before the US-China trade war reached its heatedest stages. In 2019, manufacturing jobs were largely unchanged, suggesting that the sharp wage escalations may have failed.

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