Enforcement When Trade Is Unfair

When Americans complain about the unfairness of trade, policymakers often point to other countries’ failures to meet obligations they agreed to take on in order to enter the WTO and take advantage of low-tariff trade with the United States. These countries pledge not to sell products below cost overseas (“dumping”) or to limit the ways they use subsidies (government assistance to businesses) in order to support their own industries at the expense of foreign competitors. Many Americans also believe that some of our largest trading partners deliberately suppress the value of their currencies in order to be able to beat U.S. prices.

Much contemporary concern about unfair trade centers on China. A White House fact sheet on China’s trade policies summarizes the administration’s view: “For many years, China has pursued industrial policies and unfair trade practices—including dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies—that champion Chinese firms and make it impossible for many United States firms to compete on a level playing field.” In 2018, the administration began to levy tariffs and other trade barriers on imports from China in response to what it labeled a pattern of unfair trade practices. Since then, both the United States and China have engaged in a series of tit-for-tat tariff hikes.

Democratic and Republican candidates have criticized the administration’s trade war with China, pointing to losses suffered by American farmers and consumers as a result of increased tariffs and China’s retaliatory measures. Harris has called the policy “nothing more than the Trump trade tax,” while Governor Weld has stated that “Mr. Trump thinks that when he slaps a tariff on China it's paid by China. Back in Beijing. It's not. It's paid by American farmers or American businesses or individuals who need to import something from China.” Representative Walsh has written in an op-ed that “Mr. Trump’s tariffs are a tax increase on middle-class Americans and are devastating to our farmers. That’s not a smart electoral strategy."

Candidates have also criticized the administration’s lack of a broader strategy on the trade war. When asked about tariffs, for example, Buttigieg said, “It’s not about the tariffs. Look, what’s going on right now is a president who has reduced the entire China challenge into a question of tariffs, when what we know is that the tariffs are coming down on us more than anybody else and there's a lack of a bigger strategy.”

While candidates on both sides have almost uniformly criticized the trade war, only Gabbard, O’Rourke, Steyer, and Weld have affirmatively said that they would immediately repeal Trump’s tariffs. Others have said that they would keep the Trump tariffs in place—at least in the short-run—and use them as leverage against China. Yang, for example, has said, “I would let the Chinese know that we need to hammer out a deal.”

While the Trump administration has worked to negotiate a deal with China, for his part, candidate Trump has asserted that he would not hesitate to continue to use tariffs against Beijing or others. The president has also called for negotiating bilateral trade deals with key partners, in contrast to the multilateral approach favored by many of his rivals.

While criticizing Trump’s policies, candidates in both parties have also been critical of China’s trade practices, often citing currency manipulation and intellectual property theft. As an alternative to tariffs, candidates across party lines—Biden, Booker, Buttigieg, Castro, Harris, O’Rourke, Walsh, Weld, and Yang—have advocated for working with American allies to counter China’s unfair trade practices. Castro, for example, has argued, “you want to outcompete China? We should start by building alliances around the world, not tearing them down.” Walsh said, “We could have a coalition of countries that could deal with China. [Trump has] done it all by himself. And America has paid a big, big price for that."

What that looks like in practice is less clear. O’Rourke has proposed two specific ways that the United States could partner with allies at the WTO: collaborate on WTO complaints about Chinese import taxes, called countervailing duties, and launch a case arguing that China has not met its commitments overall and does not belong in the WTO. Sanford, Weld, and Yang see entering the successor to the Trans-Pacific Partnership, negotiated under the Obama administration but not submitted to Congress by either Obama or Trump, as a way to partner with others to push China to change its ways. Biden and O’Rourke favor re-negotiating the agreement—which is now in force among 11 other countries as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—and then joining on terms more favorable to the United States.

While working with allies is by far the most common suggestion among candidates, some have suggested other policies to deal with unfair trade practices. O’Rourke’s comprehensive trade plan included a proposal to de-list Chinese companies from U.S. stock exchanges and limit access to the U.S. banking and financial system for Chinese companies. Warren’s plan contains extensive reforms to how the government assesses violations and conducts enforcement unilaterally.

Aside from China, candidates have had little to say about other countries with which the United States has had trade disagreements, though Trump has highlighted issues with Germany and others. O’Rourke proposed working with developing countries to build their enforcement capacity by “collaborat[ing] on the inspection of facilities that may be violating standards. Facilities found to be in violation would be denied preferential tariffs and, in some cases, access to the U.S. market altogether,” a strategy his campaign said was modeled on the U.S.-Peru trade agreement’s timber annex. Warren’s trade plan calls for creating a “non-sustainable economy” designation that would allow the United States to impose tougher penalties on countries with poor environmental and labor practices and embedding a labor attaché at U.S. embassies to monitor compliance. Warren’s campaign and others have also proposed reforms to how the U.S. makes trade policy domestically that would impinge on enforcement.