Here We Go Again: The Candidates’ Trade Policies

Commentary by William Alan Reinsch

Published September 30, 2024

Having spent last week on substance (the Draghi report), it is time to return to politics, both because that seems to be all anyone is talking about these days and because both presidential candidates provided additional details of their economic policies last week. Both gave speeches, and the Harris campaign produced an 80-page document outlining her policies.

Of course, neither candidate focused exclusively on trade. Indeed, 820 pages only on trade policy would be too much for even the biggest trade wonk to swallow. Most of their comments concerned domestic economic policy issues. Since this column provides commentary and analysis rather than actual facts, it will not spend much time repeating the candidates' proposals. If you haven't read them already, there are plenty of places to look. Instead, this column will use a device from my high school history classes-compare and contrast.

First, there was the expected difference in tone. Former president Donald Trump's proposals come out of a narrative of victimization-the foreigners stealing American jobs and undermining our economy. A large part of his message is simply getting even-making the foreigners pay for their past misdeeds. His America is in terrible shape, and he is going to fix it. His rhetoric also reflects his zero-sum view of the world. He talks about taking jobs away from others by forcing them to relocate to the United States. Harris is more willing to accept win-win outcomes.

Vice President Kamala Harris, in contrast, is sunnier. Of course, she can't say the economy is in terrible shape since she just spent the past four years helping manage it, but her "America Forward" plan, in contrast to Trump's plan, focuses as much on the future as on the past. She makes the obligatory, and presumably sincere, nods to traditional manufacturing, particularly steel, and the need to protect it from unfair foreign trade practices, but much of her attention looks to the future and how to nurture the critical industries that we will need to compete effectively with China. In contrast, Trump is probably not against that but spends much less time talking about it.

In terms of specific proposals-and neither candidate has been as detailed as analysts would like-there are similarities and differences. They are similar in proposing a mix of carrots and sticks to stimulate and regrow the economy, but Trump has a lot more sticks, which is perhaps the biggest difference between the two.

In terms of carrots, both rely primarily on tax incentives, but Trump goes much bigger than Harris. Efforts to estimate the cost of both candidates' proposals are complicated because of vagueness and shifting positions, but one analysis concludes that Trump's proposals, not just on trade, overall would cost the country between $3.6 and $6.6 trillion over 10 years, and Harris's would range between a $400.0 billion gain to a $1.4 trillion cost over the same period. The potential gain is because she has proposed tax increases. There is growing concern among economists over the rapidly growing national debt, which Trump's proposals would make much worse, but whether the public can be persuaded to care about that is a mystery. The other reason for the cost differential is that many of Trump's proposals are broad, such as his proposed cut in the corporate tax rate to 15 percent, and proposed research and development tax benefits. Harris's proposals tend to be more targeted on the specific industries she wants to promote, most of them related to competing with China.

The biggest difference between the two, not unexpectedly, is in tariffs. Tariffs are Trump's favorite tool, and he has proposed a lot of them-an across-the-board 10 or 20 percent tariff, a 60 percent or more tariff on Chinese imports, and selective tariffs against specific countries or companies that do things he doesn't like, such as his threat to impose a 200 percent tariff on John Deere if it moves its manufacturing to Mexico or his threat to countries that attempt to move away from using the dollar in their transactions. There is a debate over the legal basis for these tariffs and whether they could be imposed without congressional action-Trump has said he does not need Congress for this-but we will save that for another time. There is less debate over whether the tariffs would violate our World Trade Organization obligations and upend the global trading system-they would.

Harris, in contrast, has not proposed anything like that, although most observers believe she would continue the Biden administration's tariffs and perhaps selectively increase them. The word "selectively" is key. Trump's approach is a meat cleaver; Harris's is a scalpel. The other difference is in their objectives. Trump's tariffs are intended as punishment for countries or companies that are doing-or considering doing-things he doesn't like. Harris's tariffs lie on the promote side of the promote-protect equation. She sees tariffs as a selective tool to help U.S. companies essential to our future (and our security) survive and thrive. Trump's tariffs might do that as well, but their collateral damage is far greater.

Since both candidates end up with tariffs in some configuration, it is easy to conclude that, on trade, they are both the same. That would be a mistake. Trump's world is Hobbesian; Harris's is closer to Rousseau's. Trump proposes in broad strokes, Harris in more carefully constructed details. Neither, unfortunately, provides a clear vision of what the trading system of the future should look like because both are intent on appealing to U.S. voters' immediate problems. Perhaps after the election, we will get a clearer picture of how the winner sees the global trading system and the United States' place in it.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.

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