[CTC] Harris’s Chance on Trade

[Arthur Stamoulis]

https://www.nybooks.com/online/2024/10/13/harriss-chance-on-trade/ <https://www.nybooks.com/online/2024/10/13/harriss-chance-on-trade/> 

Harris’s Chance on Trade <https://www.nybooks.com/online/2024/10/13/harriss-chance-on-trade/>
By: Zephyr Teachout
10/13/2024
In 2016, during the surreal presidential race between Donald Trump and Hillary Clinton, I was the Democratic nominee for Congress in a swing district in the Hudson Valley. The incumbent was a retiring Republican, but Barack Obama had won in the area by several points in 2012. A Democratic pickup seemed within reach. 
In the mainstream media, voters in rural and postindustrial regions like the Hudson Valley tend to be portrayed as insular, caring largely about domestic issues like inflation and welfare. And yet the people I met at county fairs and chicken dinners and parades also cared deeply about trade. If you asked them their top priorities, they wouldn’t say “trade policy,” necessarily. But if you heard them tell a story of their lives, their work, and the towns they lived in, they’d invariably say jobs were being lost to Mexico and China, or mention NAFTA. Our internal polling backed up what I was hearing at the Ellenville Blueberry Festival. Of seven “profile” messages we tested, the strongest was: “[Candidate] believes we need to bring jobs home, make things in America again, and support local farming and manufacturing.” A net 93 percent supported it. 
People I met associated Trump with being against NAFTA and trade deals like the then-pending Trans-Pacific Partnership (TPP), an initiative Obama was selling as a way to remove barriers to export and investment in the Pacific Rim. (Trump was not alone. Obama’s proposal was fiercely opposed by groups devoted to labor, human rights, democracy, and the environment. “The TPP would be disastrous for working people,” Richard Trumka, then head of the AFL-CIO, wrote in 2016. It “would take a sledgehammer to American manufacturing.”) Trump repeatedly attacked China for taking away good jobs, called NAFTA a “disaster,” and said he’d push for a “total renegotiation.” “If we don’t get a better deal,” he promised, “we will walk away.” 
Clinton, meanwhile, was associated with trade liberalization. Her foreign target of choice was Russia. These voters didn’t like or trust Russia, but they didn’t particularly care about it, either. Trade deals, toxins in their water, opioids, and corruption—not the Cold War—loomed large in their understanding of what had disrupted their lives. No one I met had it on their radar that Clinton—who had promoted the TPP for Obama—now nominally opposed it and said that she “would like to renegotiate NAFTA” because “there were parts of it that did not work as hoped for.” That might have been a genuine policy goal of hers, but she did not speak convincingly about it.
In the end my district went for Trump. He won for a multitude of reasons. The loss of IBM facilities in the early 1990s and jobs to offshoring still stung. So did the fact that many blue-collar workers were stuck with degraded jobs and stagnant wages. People wanted to know that politicians sympathized with such losses; most importantly, they wanted to see candidates point fingers—to acknowledge that their suffering was not random but caused by someone and something. 
When Trump pointed the finger at NAFTA and China, it resonated with their experiences. His other finger-pointing, of course, takes a racist form—most notably when he casts immigrants as invaders who eat dog flesh, demons who will at once terrorize American workers and take their jobs. But when instinct led him to single out trade deals, he struck electoral gold. Three decades of agreements branded as free trade—overseen by Democrats and Republicans alike, bolstered by a neoliberal philosophy, backed by wealthy donors—have decimated American manufacturing. 
That lesson should not be forgotten today. Trade could be the decisive issue in November’s election; Trump’s team, at any rate, seems to think it will be. In recent months he has repeatedly promised to impose 60 percent tariffs on Chinese goods and 10 to 20 percent across-the-board tariffs on all imported goods, as well as to punish John Deere with 200 percent tariffs for outsourcing jobs to Mexico. His running mate, JD Vance, leans heavily on tough-on-trade rhetoric; in last week’s vice-presidential debate he answered a question about climate change by saying that the way forward was to “reshore as much American manufacturing as possible.” 
But there’s also a chance for Harris to win on trade—to speak forcefully about the harms that decades of bad trade deals have done. She could even flip the script on Trump, highlighting the gulf between the promises he made in 2016 about trade and what he delivered. She has a strong foundation to work from: Biden’s approach to trade diverged significantly—and positively—from those of his Democratic predecessors. Harris doesn’t have to embrace Biden, whose economic reputation is (unfairly) tarnished, to put that precedent to use. She could lay out a vision of fair, green, and worker-first global commerce—and explain why that will require tariffs. If she does get elected, moreover, she’s in a good position to build on what Biden started.
*
In 2021 the Congressional Progressive Caucus commissioned a poll among swing and “surge” voters in competitive districts. “Most voters,” it concluded, “have trouble describing a clear positive vision of what the Democratic Party stands for,” including on the economy. Confusion about the national party precedes Harris, but voters’ lack of familiarity with her doubled the uncertainty. When voters say they want more economic policy from Kamala Harris, I don’t think they mean they want to see white papers or hear about tax credits. They want a worldview. They want to know how she—and the Democratic Party—understand the rising cost of housing, health care, and groceries, the collapse of small businesses, and most importantly, the decline of good jobs and blue-collar careers over thirty years. 
Democrats tend to avoid cause and effect, skipping straight to solutions. When they describe inequality, even in the very act of passing legislation to ameliorate it, they frequently retreat into a timid passive voice. “America has a severe income inequality crisis—working families are losing ground while the rich are getting richer every day,” Chuck Schumer said in 2021, when he came out in support of the PRO Act, which makes it easier for workers to unionize. “For years the divide between the country’s wealthiest individuals and working families has been left unchecked and the pandemic has deepened these inequities,” Kirsten Gillibrand added. They were correct. But you are making a fundamental political error if you don’t start by saying who did what to whom. 
In few areas of policy is this refusal to point to causes more glaring than global trade, where the culprits are easy to identify: the politicians who passed free trade deals and the multinationals who advocated for those deals and then used them to outsource ever more jobs. Many voters seem to agree; no matter how many editorials inveigh against tariffs, they remain popular, especially in the industrial and postindustrial regions, where Harris desperately needs votes. 
Perhaps national Democrats are reluctant to prosecute this case too sternly because they themselves bear a significant share of the responsibility for pushing NAFTA through and enabling the consolidation of financial power. The party’s commitment to free trade persisted through the Obama presidency; advocating for the TPP was one of his priorities during his last year in office. But this is just bad politics. Trump doesn’t check in with George W. Bush when he slams NAFTA, and Harris need not be too polite to Bill Clinton, either. 
Will Harris follow the same pattern of avoidance? So far the signs are mixed. She has a surprisingly robust record of challenging the old trade agenda. She opposed the TPP as a Senate candidate in 2016, arguing that the deal was bad for American workers and the environment and that the process of negotiating it lacked transparency <https://archive.is/o/wAvwN/https:/www.latimes.com/politics/la-pol-ca-harriz-sanchez-california-senate-questions-20161014-snap-htmlstory.html>. She reiterated <https://archive.is/o/wAvwN/https:/www.cfr.org/article/presidential-candidates-trans-pacific-partnership> that position in 2020: “I will oppose any trade deal that doesn’t look out for the best interests of American workers and raise environmental standards, and unfortunately the TPP didn’t pass either test.” She was one of ten senators who opposed Trump’s renegotiated NAFTA, the United States–Mexico–Canada Agreement (USMCA). “The USMCA’s environmental provisions are insufficient,” she said at the time. It “fails to meet the crises of this moment.”
All this gives her an opening to outflank Trump on trade. Instead of letting him present himself as the pro-tariff candidate standing up for working people, she could reiterate her support for smart tariffs tied to subsidies. She could build on her pledge to use the USMCA’s mandatory six-year review to make that deal benefit the working class. She could spotlight that Trump failed to deliver <https://archive.is/o/wAvwN/https:/www.epi.org/publication/reshoring-manufacturing-jobs/> on his promise to end the offshoring of Americans jobs to Mexico. She could hammer home that, contrary to his bluster, the trade deficit increased <https://archive.is/o/wAvwN/https:/www.politico.com/news/2021/02/05/2020-trade-figures-trump-failure-deficit-466116> over the course of his presidency by $198 billion. She could make sure voters know that he betrayed his promise in 2016 to deny federal contracts to companies that offshored jobs: according to a report by Public Citizen <https://archive.is/o/wAvwN/https:/www.citizen.org/wp-content/uploads/Govt-Contracts-w-Offshorers-Report-10052020FINAL.pdf>, five of the ten companies to which his administration gave the highest-value contracts—some $425.6 billion in tax dollars—did just that. United Technologies received $15 billion dollars even as it sent 1,300 jobs to Mexico. 
At first, it seemed unlikely that Harris would pursue that strategy. She began her campaign by avoiding economic issues, presumably because she was so strong on abortion and health care access. Then, in September, perhaps in response to concerns that she was trailing on the issue that voters cared most about, she did a big economic policy rollout, which focused on tax incentives. It fell flat: her messaging seemed, as The New York Times noted <https://archive.is/o/wAvwN/https:/www.nytimes.com/2024/09/25/us/politics/harris-economic-speech-pro-business.html>, “tailored to voters sitting in wood-paneled offices reading the print edition of The Wall Street Journal” rather than to voters stuck in a warehouse. The pattern continued: a BBC review found that in the first five rallies he hosted after the presidential debate, Trump mentioned China forty times, whereas Harris, in her first six post-debate rallies, never did. Harris sometimes promises more domestic manufacturing, but she less often tells a clear story about what got us here.
But her vigorous if rare critiques of Trump’s trade record give some room for hope that things might change. To hear what that might sound like, consider the statement <https://archive.is/o/wAvwN/https:/www.facebook.com/KamalaHarris/posts/donald-trump-is-one-of-the-biggest-losers-of-manufacturing-in-american-history-h/1086398362846600/> she made on September 26, before a trip to Michigan:
Donald Trump is one of the biggest losers of manufacturing in American history.…It was Trump’s trade deal that made it far too easy for a major auto company like Stellantis to break their word to workers by outsourcing American jobs. As one of only ten senators to vote against USMCA, I knew it was not sufficient to protect our country and its workers…. As president, I will bring autoworker jobs back to this country and create an opportunity economy that strengthens manufacturing, unions, and builds prosperity and security for America’s future.
*
If Harris wins, what trade policy would she inherit? When Biden came into office, the national Democratic party remained firmly publicly identified with free trade, even if there were cracks in the edifice. Obama spent his last two years trying to push through the TPP; Hillary Clinton supported that deal before she opposed it; Biden himself had embraced it; and Bill Clinton, who still loomed large over the party, had in the recent past not only passed NAFTA but got Congress to award China permanent normal trade relations, thereby enabling it to join the WTO, promising that this would open markets without taking jobs.
It would not be an exaggeration to say that Biden changed that paradigm decisively. He retained most of Trump’s tariffs and in 2024 <https://archive.is/o/wAvwN/https:/www.whitehouse.gov/briefing-room/statements-releases/2024/05/14/fact-sheet-president-biden-takes-action-to-protect-american-workers-and-businesses-from-chinas-unfair-trade-practices/> put 100 percent tariffs on electric cars from China, doubled the tariffs on solar cells and semiconductors, and more than tripled those on steel and aluminum. Most important, he provided substantial subsidies to domestic manufacturing in the form of three big policy packages: the Inflation Reduction Act (IRA), the CHIPS Act, and the Infrastructure Investment and Jobs Act. Per the Center for American Progress <https://archive.is/o/wAvwN/https:/www.americanprogress.org/article/4-lessons-on-creating-good-manufacturing-jobs-through-the-biden-harris-administrations-industrial-investments/>, nearly 60,000 new jobs (and growing) have been created in the semiconductor industry alone, and according to Moody’s Analytics <https://archive.is/o/wAvwN/https:/www.economy.com/economicview/analysis/407000/US-Factory-Building-Strong-but-Set-to-Slow> the United States now enjoys the highest level of investment in factory construction in fifty years. Biden carried on with these policies even when they angered close allies: in Europe, lawmakers claimed that subsidies for clean technologies violated WTO trade rules and threatened their own industries. China eventually asked the WTO to set up a panel to determine whether the electric vehicle tax credits in the IRA violate global trade rules; last month the WTO approved its request.
Leading this agenda was US Trade Representative (USTR) Katherine Tai, one of the administration’s most underappreciated members. She came into the job with an intimate understanding of the challenges that China’s mercantilist trade policies posed to American workers: in her previous stint at the office of the USTR, she litigated trade enforcement cases against China at the WTO; as the lead trade lawyer for the House Democrats’ Ways and Means Committee, she worked to close legal loopholes that made trade policy hard to enforce. While helping Democratic leadership negotiate the USMCA, she developed the first facility-specific systems for enforcing labor standards in any trade agreement, which enables the two governments to sanction Mexico firms that violate labor rules. The policy effectively supports workers on both sides of the border, by making it easier to report labor violations in Mexico. 
Her approach is to set high labor, environmental, and other standards to attract trade from countries willing to meet such terms. “Our global supply chains…have been created to maximize short-term efficiency and minimize costs,” she told the National Press Club in 2023. They incentivized “countries to compete by maintaining lower standards” and attract companies seeking optimal efficiency: “This is the race to the bottom, where exploitation is rewarded.” Now, she argued, those systems had “to be redesigned for resilience.” 
In the same speech, she argued for an antimonopoly approach to regulating supply chains. A principle of antitrust thinking is that capacity and power ought to be distributed, because centralized systems are corruptible, corrupting, and unstable. Tai’s vision for trade likewise involves ensuring that no country has a monopoly on crucial components in supply chains. Because China has cornered so many vital markets, like medical supplies, minerals essential to clean tech, and communications equipment, an anti-monopoly focus necessarily puts China front and center, but it is not solely about China. On a broader level, Tai was challenging the traditional relationship between trade and other areas of domestic economic policy, making clear that they would have to support each other: any coherent approach toward, say, green energy or affordable medicine requires action on both fronts.
What’s still more remarkable is that Tai accomplished all this while reportedly <https://archive.is/o/wAvwN/https:/prospect.org/blogs-and-newsletters/tap/2024-01-29-politicos-hit-job-trade-rep-katherine-tai/> lacking a close relationship with Biden and working in the crosshairs of big global corporate entities. The USTR is within the cabinet, in contrast to the FTC, an independent agency where Lina Khan and the other commissioners set the agenda. Tai’s office has therefore become a center of internecine struggles. (It probably does not make it easy that she inherited many staffers from the Clinton and Obama eras who bristle at her vision.) The US Chamber of Commerce has publicly opposed her policies, as have big tech and pharma trade groups. Some observers suspect <https://archive.is/o/wAvwN/https:/prospect.org/blogs-and-newsletters/tap/2024-04-03-trade-war-within-us-government/> that Big Tech is attempting behind the scenes to shift power away from the USTR.
*
In retrospect, Biden and Tai’s approach reveals how thoroughly their predecessors had fetishized 1990s trade dogma. (One can still hear this tendency in the corporate critique that Biden is “using trade” to try to “do too much.”) Part of their innovation was to treat trade like, say, taxes—as a tool to achieve particular ends, such as protecting American workers, keeping down medicine prices, countering monopoly abuses, and ensuring that the domestic economy stays resilient in the face of global economic shocks and climate disaster. This approach’s effects won’t be seen in full for years, and it’s clearly too soon to celebrate victory, but there are already signs that it is starting to work: the lowest trade deficit in a decade, new centers of manufacturing, higher wages. In the Hudson Valley, for one, IBM is poised to come roaring back. Because of Biden’s combination of subsidies and tariffs, it promises to invest $20 billion in the region, making semiconductors, mainframes, and quantum computing centers in cities like Poughkeepsie. New jobs are opening up; for instance, the semiconductor firm AMD has set up two facilities in the area. 
Not for nothing, the Democratic candidate running this year in part of my old district, Josh Riley, is embracing tariffs. “We have got to allow American workers to work on a level playing field,” he told the Cortland Standard <https://archive.is/o/wAvwN/https:/www.cortlandstandard.com/stories/riley-agrees-with-trump-on-tariffs,107324>. He too is pointing fingers, telling poignant stories about how the big trade deals of the 1990s harmed his own parents. “They worked their hands to the bones to put clothes on my back, to pay for college and to give me better opportunities,” he said. Trade deals killed that chance: “My uncle lost his job; my neighbor lost his job. They all lost jobs…. The worse it was for my neighborhood, my community, my friends, the better it was for Wall Street.” 
Some commentators worry <https://archive.is/o/wAvwN/https:/www.washingtonpost.com/technology/2024/09/03/harris-campaign-silicon-valley-tech-policy/> that Harris is too close to big tech companies and could, if she wins, carry their water in office. That might entail accommodating the industry’s lobbyists, who are eager, according to a recent report from Rethink Trade <https://archive.is/o/wAvwN/https:/rethinktrade.org/big-techs-digital-trade-agenda-threats-states-tech-policy-goals/>, to use trade agreements to preempt federal and state policies that would protect online privacy and data security, stop civil rights abuses, regulate AI, and guarantee a right to repair. (They claim, for instance, that Europe’s Digital Markets Act—aimed at making the internet fairer, for instance, by allowing iPhone users to purchase apps from outside the Apple Store—creates impermissible barriers to “digital trade.”) 
But Harris could also be a transformational trade president, extending Biden’s policies and even pushing to renegotiate central tenants of the WTO. A core problem with the current global trading regime is that it uses “trade” mechanisms to limit the ability of countries to set their energy policy, antimonopoly and labor laws, product safety rules, and standards for financial regulation. Harris could champion WTO reform in the name of workers, the environment, and democracy. 
Either way, Democrats are going to struggle to win the case on the economy until they formulate a clear story about who is responsible for the highest levels of inequality in American history: the forty years of stagnant wages, the growing deaths of despair, the volatile price of eggs, the accelerating decline, until recently, of small businesses. Ultra-globalization isn’t responsible for all those crises, but it certainly had a part in them. Even as we condemn Trump’s scapegoating, which makes innocent people bear the burden of societal violence, we should also recognize that people need to make sense of who and what to blame for generations of suffering and lost hopes.
The question is whether Harris can compete with Trump’s false populism by committing to deliver the outcomes he again promises but will again fail to deliver. Can she convince voters that she understands what happened to American jobs, what caused it, and how critical it is—for American workers and the climate alike—to reform the WTO? It could make all the difference. 
 

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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