Lee Hyo-young

Regardless of who wins in the Nov. 5 U.S. presidential elections, there seems to be a unified front in U.S. trade policy direction: protectionism. It is now quite obvious that Trump and the Republican Party are promising trade protectionism if they come into the presidential office by imposing prohibitive high-level tariffs against China and universal tariffs against all countries, including allies.

The Democratic Party's stance on trade policy has rather been blurred, disguised by its "de-risking" strategy against China and "small yard, high fence" approach in the technology sector, while maintaining the tariff barriers that were first installed under the previous Trump administration.

More recently, the Biden administration has tightened its stance on China, by deciding to drastically increase tariffs against several key products imported by China, such as 100-percent tariffs on Chinese electric vehicles and 50-percent tariffs on semiconductors. This is in line with the Democratic Party's presidential campaign policy that emphasizes the need for "targeted" tariff increases vis-à-vis Trump's "universal" tariff approach.

Despite the efforts of the Democratic Party's presidential campaign to differentiate its tariff increases as necessary measures that would not harm the U.S. domestic economy, these policies are bound to have an impact on prices. Blocked imports of Chinese electric vehicles, steel, aluminum, semiconductors and batteries will have to be replaced by imports from other countries, which may be more expensive. Increased production costs will lead to increased prices in final products, potentially leading to prolonged inflationary pressures.

However, at the moment, policy measures that demonstrate the current administration's strong stance against China will be helpful for the presidential campaigns, and beneficial for garnering votes from those states that are home to these industries.

Notwithstanding the differentiating objectives of the tariff measures, the use of import tariffs is nonetheless a form of trade protectionism unless they are imposed within the allowed boundaries as prescribed by the multilateral trade rules of the World Trade Organization. According to the agreed rules, tariff measures can be justified if they are imposed after a due process of investigation and demonstrated proportionality of measures to address the injury inflicted on the domestic industry. While the recent tariff increases on Chinese electric vehicles and semiconductors by the Biden administration may be justifiable based on economic security reasons, these measures may also be considered to be out of proportion when judged from the criteria of addressing the commercial injury caused on the relevant industry. While these measures are targeted only against China, it does not preclude the fact that the measures are fundamentally protectionist in nature, especially when the increased tariff levels are highly prohibitive.

Kamala Harris, as the Democratic Party's presidential candidate, has not yet provided a clear picture of the future direction of U.S. trade policy, but she is not likely to pursue free trade or trade liberalism. During her stint as a senator for the state of California, Harris was one of the 10 lawmakers voting in opposition to the passage of trade agreements under the Trump administration. Most notable was Harris' opposition to the passage of the USMCA, or the U.S.-Mexico-Canada Agreement, for its lack of adequacy of environment-related provisions and failure to address the climate change issue. This move also demonstrates how Harris perceives trade agreements — as a policy tool to address environment issues — in line with the traditional Democratic Party's trade policy direction. Furthermore, she is also expected to introduce policies that would address climate change issues, even if this means using trade policy as a tool that may have negative consequences on global trade flows and trade growth of less-developed countries.

Obviously, trade protectionism is a useful policy tool to garner support of U.S. voters who are usually less interested in the global economy and more interested in domestic prices and the local economy. While trade protectionism may not be harmful to the U.S. domestic economy in the near or midterm, the impact of the measures may be more devastating for the rest of the world and the United States in the long term. It has now become quite obvious that the U.S. is no longer willing to provide global public goods for the benefit of the international community, and a paradigm shift previously based on the liberal international economic order is already taking place. Efforts led by the U.S. government in terms of changing global supply chains and measures restricting global trade and investments are inevitably leading to a world that is more fragmented than before, along with countries that can be trusted and those that cannot.

The criterion of "trust," however, unless it can be shared by other countries, may not be a universal value that can make the international community collaborate to maintain the current fragile state of the global economy.

When the dust settles down after the November elections, there may still be hope that U.S. trade policy-makers become more clear-sighted on the impact and significance of the U.S. trade policy and the direction it pursues thereof.

Lee Hyo-young is an associate professor at the Korea National Diplomatic Academy (KNDA), teaching international trade & diplomacy. Before joining the KNDA in March 2017, she worked as a research fellow at the Korea Institute for International Economic Policy, during which she also worked as assistant secretary for trade, industry and energy at the presidential office from 2014 to 2015.