On the campaign trail and as president-elect, Joe Biden vowed that his trade policy would be different from Donald Trump’s. He promised to work specifically with other democracies, saying, “I’m not looking for punitive trade. The idea that we are poking our finger in the eyes of our friends and embracing autocrats makes no sense to me.”
And a glowing joint communique announcing a decision by the United States to suspend temporarily its Section 232 tariffs seems in keeping with that promise. The U.S. will lift tariffs on steel and aluminum imports from the European Union while the EU suspends its retaliatory tariffs on a host of U.S. items, including Harley-Davidson motorcycles, Levi jeans, and bourbon whiskey. The pact will “re-establish historical transatlantic trade flows in steel and aluminum” and lead to “joint steps to defend workers, industries and communities from global overcapacity and climate change.”
But there’s more to it than that, and little of it is good news for free-trade advocates. What’s not to like? Quite a bit actually, especially if you’re a person who favors individual freedom, economic opportunity, open markets, and policies that treat people fairly. The deal simply swaps one type of protection for another—the Trump tariffs will be replaced with a quota system that automatically reimposes tariffs when imports rise above a set threshold.
On the bright side, there may be modest benefits to some steel and aluminum users who have been victimized by the tariffs. This arrangement applies only to the EU, however, so imports from most other countries will continue to be restricted. The U.S. metals market is likely to remain tight and overpriced.