Export Trade: Will It Continue in the Biden Administration?
By Roxanne Baumann, Director Global Engagement, WMEP Manufacturing Solutions
International trade goes back 1,000 of years because no country has enough raw materials or goods to be self-sufficient. Historically, export trade is a huge lift for economic growth; raising incomes, creating jobs, reducing prices, sparking innovation, extending product life cycles, and increasing workers’ earning power. Wisconsin relies on international markets for growth with annual exports of $21.5 billion. For Wisconsin manufacturers, this market diversification shields them from domestic market downturns. With 197 countries in the world; someone needs or wants your products. The trick is to proactively go after the best opportunities, with the least risk. And, at minimum, learn how to “fail fast, fail cheap” and move on to the next country.
Trade agreements can boost economic growth; but must be done carefully or they can bring unwanted competition to domestic businesses. In the era post World War II, the US traded freely with many countries; in an effort to rebuild the infrastructure of our allies and world economies. Over time, large corporations took advantage of these trade policies; and the balance became uneven. The Trump Administration’s policies were about putting working people first, bringing or keeping manufacturing and jobs in the US, and raising working wages. The Trump Administration also raised the alarm about China. Educated people and world leaders now understand our relationship with China has become unbalanced; not helping US workers; and disproportionately helping China. Historically, good political relationships; lead to good trade relationships. Illuminating this has changed the way we think about China. President Biden did not run against the Trump trade policies; and in his campaign; pledged not to focus on new trade talks until domestic economic stimulus is secured and Covid dealt with. Incoming US Trade Representative nominee Katherine Tai has promised to push an agenda of “worker-centered” trade; that recognizes “people are not just consumers. They are also workers and wage earners.” Tai is highly experienced. As an attorney, and former the chief trade counsel for the U.S. House Committee on Ways and Means; she has earned support from many in Congress during the USMCA and China Trade negotiations. She was involved in litigating US disputes against China with the World Health Organization.
So far, we have seen a Biden approach that’s somewhere between Trump’s aggressive trade wars and a passive, uncritical acceptance of any/all free trade. Biden has a long track record of trade liberalization; yet he promises to focus on domestic priorities to boost US competitiveness; including implementing “Buy American” policies to strengthen workers and wage earners here. He also has a record of voting against trade deals that he saw as weak on worker’s rights and environmental protections. He has promised to unite with our allies, especially the EU, in a common front for China negotiations.
The World Bank expects the global economy to expand 4% in 2021. US GDP is forecast to grow 3.5% in2021; the EU +3.6%, Japan + 2.5%; and aggregate emerging markets, including China; to grow +5%. These global markets will represent many opportunities for US manufacturers; and export growth will fit into the Biden Administration plans. In my export experience with Brazil, I’ve watched Brazil try to maintain protectionist policies. Without competition, innovation slows; domestic product declines in quality and domestic goods can become more expensive than foreign competitors. It weakens and slows economic growth. Not something we’d want for our US economy. As always, global market diversification is one of the best strategies any Wisconsin manufacturer can adopt to quickly pivot in market changes. Wisconsin has a vibrant, business-results focused trade community. For Wisconsin, exporting will continue to be a key pillar in our future growth; and in any Administration policy.