Is Biden's US back as a global trade leader or does Trump's protectionism still cast a shadow?

Fri 28 May 2021
Posted by: William Barns-Graham
Trade News

white house

US President Joe Biden entered the White House earlier this year pledging to restore the country’s trade relations with allies while maintaining a vigilant approach to dealings with China.

However, four months into his presidency, has Biden restored the US as the leading champion for free global trade? 

The IOE&IT Daily Update has a look at how the country is getting on with its major trade partners.

‘Candid’ talks with China

The BBC reports that US and Chinese officials held “candid, pragmatic” talks yesterday (27 May), with US Trade Representative (USTR) Katherine Tai admitting the “development of bilateral trade is very important”.

Ahead of the talks, Tai also said China continued to pose “very large challenges” to the US. 

Biden’s team are evaluating the ‘phase 1’ deal former President Donald Trump signed with China in January 2020, which sought to bring some order to the often-strained relations that typified the latter’s tenure in the White House.

Under the deal, China pledged to increase its purchases of US products and services by at least $200bn (£142bn) over 2020 and 2021, but there are concerns this target hasn’t been met and China may be 40% short.

Tariffs put in place by Trump will remain in place for now.

Canada relations sour over milk

Hopes for better trade relations with Canada have faded after the US sued the country over controversial dairy duties, which the White House says breach the terms of the US-Mexico-Canada Agreement (USMCA), the Guardian reports

Canada strictly controls its dairy market with tariffs that are meant to keep domestic prices stable. Imported products – such as American cheese – receive a 300% levy, for instance.

Proposals for a deal to open its market to more imports still favour Canadian producers, according to Tai.

The US commerce department, for its part, last week doubled tariffs on softwood lumber, a key Canadian export.

Mixed bag for EU

While there is optimism that a resolution can soon be found to the long-running dispute over aircraft subsidies, duties look likely to remain for the rest of the year due to a separate dispute regarding US tariffs on steel and aluminium

Aircraft dispute

The current suspension of tariffs imposed because of the row over subsidies for aircraft manufactures Boeing and Airbus is due to run until 10 July, after which the taxes could be re-applied if there is no solution.

However, both sides have expressed optimism that a resolution will be found, according to Reuters.

Steel tariffs

Although US tariffs remain in place on European steel, the EU has said it will not increase the retaliatory tariffs it imposed in 2018, according to the FT

The two sides have given themselves until the end of the year to engage in discussions about the tariffs that the US imposed due to its view that it was being oversupplied with steel from overseas.

Valdis Dombrovskis, executive vice-president at the European Commission, announced the current detente last week in a joint statement with counterpart Tai and secretary of commerce Gina Raimondo that aimed to “reboot the transatlantic relationship”.

UK weighs its response 

The UK is in a similar position to the EU.

The Department for International Trade this week opened a consultation on what its post-Brexit tariff response to the aluminium and steel duties should be as it can now impose its own levies as an independent trading nation, as covered in the IOE&IT Daily Update yesterday.  

The UK currently has retaliatory tariffs in place on US exports of whiskey, motorcycles and tobacco, which duplicate the those set by the EU.

It is now looking at what tariffs would best reflect its own interests with US wine, chocolate and lobster being considered for future duties. However, trade minister Liz Truss is also keen to deescalate the dispute.

Mexico’s surplus

The first meeting to review the terms of USMCA saw Mexico raise differences between the US interpretation of the deal’s automotive content rules and the more flexible Mexican and Canadian reading, according to Reuters.

The US approach makes it more difficult for automakers to source components to satisfy the threshold needed for duty-free treatment, reports Lexology. The countries have pledged to continue discussing the matter.

Mexico also asked the US to review its ground transportation rules to ensure that Mexican truckers have access to the US market – a long-time complaint from Mexico City.

Meanwhile, Reuters also reports recent trade figures showing that Mexico produced a bigger-than-expected trade surplus with the US in April, powered by record exports as US demand helped to fuel a recovery in Latin America’s second largest economy