I’ve always employed a forensic approach to trade development, anticipating issues before they become an issue by answering this simple question: “What happens before the unexpected occurs?”
Economic and geopolitical volatility create uncertainties. So, too, do changes in the deep-seated assumptions that drive business strategies. But what happens when the truly unexpected occurs? When political factors affect business? And when models, simulations, and forecasting all fail critically?
Typically, one of two things: Denial or paralysis. Both are understandable, but they do nothing to help an organization maintain or gain competitive advantage. There is a potential upside, however, for organizations with the foresight to mobilize considering disruptive scenarios—and respond in a way that ultimately powers their performance.
Analysis
International trade has emerged as a pivotal issue as the 2024 U.S. general election approaches, with presidential candidates navigating the complex web of global trade dynamics, from shifting supply chains and geopolitical tensions to emerging markets and trade agreements as they make their case for election.
Priorities will involve ensuring fair trade practices regarding intellectual property and technology, integrating environmental sustainability into trade policies, navigating trade relations amidst geopolitical conflicts, balancing trade policies to protect American workers and industries while promoting economic growth and international competitiveness, and ensuring that trading partners adhere to international trade rules.
A lesson learned from the 2016 election: drown out the noise and listen to what Trump was saying about who he disliked and who he thought treated the U.S. economy unfairly and what his ambitions were. As for VP Harris, we can also look to her past statements and policy positions as Vice President, U.S. Senator, and previous presidential candidate to predict how she would tackle international trade if elected President.
Policy Shifts
Harris:
Harris has expressed a desire to build strong alliances and collaborate with international partners. And if elected, we may see her seek to resolve trade disputes through negotiation rather than escalating tariffs as Trump has proposed. However, we note that the Biden-Harris administration left intact Trump’s tariffs on imported Chinese goods, although they did make some targeted adjustments.
Regarding global supply chains, a Harris administration would focus on policies that encourage domestic production of critical goods while also diversifying supply chains to reduce U.S. dependency on any single country. A key part of her strategy would be an investment in infrastructure and technology.
A Harris presidency would aim to modernize trade agreements. This includes updating the USMCA, United States-Mexico-Canada Agreement, which was ratified in 2020 to replace NAFTA, to tackle emerging economic challenges. If elected, she would push for the 2026 USMCA review to enhance environmental standards and pursue new trade deals that emphasize labor rights, environmental protections, and fair-trade practices.
Trump:
International trade policy in a second Trump administration would continue his “America first” approach to international trade and focus on reducing the trade deficit while protecting U.S. industries emphasizing nationalism and protectionism, with less attention to multilateral cooperation and environmental issues.
Protecting U.S. intellectual property would be a continued priority for a second Trump administration, particularly from theft or infringement from countries like China. If reelected, he may pursue measures to safeguard American technological and pharmaceutical innovations, potentially using tariffs and sanctions as tools to enforce IP rights.
Look for a strengthening of the Buy American Act and passing of the Trump Reciprocal Trade Act. The Trump Reciprocal Trade Act was a bill introduced during Trump’s presidency aimed at authorizing the president to impose equivalent tariffs on imports from countries that levy higher tariffs on US goods.
Industry Impact
- China– Both candidates have criticized China’s trade practices, but with differing approaches. Trump has threatened to impose more tariffs, while Harris has emphasized the need for a more nuanced approach, combining tariffs with diplomatic pressure and cooperation.
- Canada and Mexico – The election outcome could influence the future of these agreements, with potential implications for the automotive and agricultural sectors. Remember, the USMCA is up for review in 2026.
- Europe – Trump might prioritize bilateral deals, while Harris might focus on strengthening the EU-U.S. partnership addressing trade disputes through multilateral agreements.
- Africa – A Harris administration might prioritize African trade and development, building on the Biden administration initiatives. A Trump presidency could lead to a more transactional approach, focusing on extractive industries and security cooperation with a keen eye on further expansion of Chinese influence in the region.
- Foreign investment – A Harris administration might prioritize attracting foreign investment and promoting U.S. competitiveness, while a Trump presidency could focus on restricting foreign investment and promoting domestic industries.
Opportunities
There will be several areas for potential bipartisan cooperation on international trade in the 119th Congress regardless of whether Harris or Trump holds the presidency. This will be even more imperative should we have a divided government. Both parties can collaborate on strengthening supply chains to enhance domestic manufacturing and reduce reliance on foreign sources, particularly for critical industries. Reforming trade policies to address modern challenges, such as digital trade and environmental standards, presents another opportunity for cooperation. There is a shared concern about protecting intellectual property rights, which could lead to joint efforts to improve enforcement and international agreements.
Supporting Wisconsin agriculture through policies and trade agreements that open new markets and address trade imbalances could also gain bipartisan backing. Ensuring fair trade practices and improving trade enforcement mechanisms are common goals, as well as enhancing and expanding trade agreements like the USMCA. Additionally, supporting small- and medium-sized enterprises (SMEs) and strengthening trade relationships with key allies are areas where both sides could find common ground.
By focusing on these issues, Congress can advance U.S. economic interests and foster a productive approach to international trade, regardless of who occupies the White House.