Harris vs. Trump: trade policy - Economic Futurist Andrew Busch

2024 Election, Politics & Policy

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Executive Summary:

Shift Toward Protectionism: Both Donald Trump and Kamala Harris emphasize a protectionist trade policy, breaking from the traditional Reagan-Thatcher free-trade approach. Both favor using government resources to protect domestic manufacturing, with Trump focusing on tariffs and Harris on integrating environmental concerns into trade policies.
Diverging Trade Strategies: Trump advocates for aggressive unilateral tariffs and a transactional, mercantilist approach, while Harris leans toward multilateralism, linking trade policy with climate goals. This contrast highlights a key difference: Trump’s focus on economic dominance versus Harris’ emphasis on sustainable developments with economic growth.
Impact on Global Supply Chains: Both candidates support reshoring and nearshoring to reduce dependence on foreign supply chains, particularly from China. Mexico, Vietnam, and India are expected to benefit from this trend, reshaping global trade dynamics as companies seek to mitigate geopolitical risks.

For decades, trade policy debates pitted the free traders against the protectionists. The first camp sought global frameworks and mega-trade deals designed to ease the costs of doing business around the world. The latter camp advocated for high tariffs and government subsidies to shield domestic manufacturers from the vagaries of the open market. This contrast, though often exaggerated, highlights numerous policy decisions that influenced the global economy. In reality, the complexity of international trade meant that no country, including the United States, could fully embrace either extreme without facing serious consequences. In practice, nearly all nations – including the United States – implemented a mixed approach. “Free trade” largely became the dominant policy ethos in the ‘90s and early 2000s, but protectionist measures still guarded politically-sensitive sectors across the United States.

The 2016 presidential campaign changed everything. Once the party of vociferous free traders, the Republicans nominated Donald Trump, an avowed protectionist who viewed global and regional trade deals with extreme skepticism. Trump’s campaign upended the free trade consensus. By Election Day 2016, Trump opponent Hillary Clinton was distancing herself from the Trans-Pacific Partnership, a massive trade agreement covering Pacific Rim nations that was negotiated by fellow Democrat Barack Obama’s administration. This change in political alignment marked the beginning of a broader shift in American trade policy, which has continued to intensify over the years.

Heading into Election Day 2024, trade policy is once again at the forefront. Yet Donald Trump and Kamala Harris are outlining the contours of a policy debate irreversibly changed by the events of the last eight years. Trade skepticism and aggressive posturing vis-a-vis China have taken hold in both parties. Tariff walls first erected by Trump and his trade czar, Robert Lighthizer, largely remain in place. And mega trade deals continue to flounder, paralleling a massive loss of faith in global institutions like the World Trade Organization (WTO).

Under the old framework, the economic winners and losers were clear. Free trade benefited global companies with sprawling, just-in-time supply chains. Domestic manufacturing workers largely bore the brunt of the costs. Both Trump and Harris highlight the negative consequences of “free trade” as central aspects of their trade narrative. They even agree that the United States should use all government resources to support domestic manufacturing and prevent unfair trade competition on the global stage. This bipartisan shift towards protectionism represents a major break from the neoliberal approach that guided American trade policy for decades. It signals the beginning of a new era where economic nationalism and strategic separation from rival powers might become the standard

At the same time, the candidates’ unique proposals are creating new fault lines. Trump remains intent on supercharging his tariff-heavy, unilateral approach to trade. In his zero-sum mindset, there is no room for global compacts or virtuous alliances. There is only the trade deficit and the cold, hard logic of mercantilism. For Trump, trade policy isn’t just an economic tool; it’s a weapon in the larger struggle for global dominance. His approach reflects a transactional mindset that prioritizes short-term national gains over long-term global stability. For her part, Vice President Harris wants the United States to lead the integration of environmental and trade policy. She seeks a multilateral approach to containing China and prefers to focus economic policymaking on domestic issues, rather than trade. Harris envisions a more comprehensive approach, integrating trade policy with environmental responsibility and global cooperation. Her strategy, though less confrontational, seeks to position the United States as a leader in sustainable development.

The resulting prospects for economic growth therefore share similarities and differences. Both candidates will continue to incentivize the move toward onshoring and nearshoring, bringing the production networks of American companies closer to home. The durability of the trend continues across nearly all industrial sectors, as the private sector builds out new manufacturing clusters in Vietnam, Mexico, and India. This trend highlights a broader shift in global supply chains, as companies aim to reduce risks from geopolitical tensions and economic disruptions. The restructuring of supply chains is not just a reaction to policy pressures but also a strategic response to a more fragmented and multipolar global economy. The key divergence will appear across a range of green technologies, including electric vehicles and renewable energy.

Let’s dive in.

Former President Donald Trump

Former President Donald Trump’s trade policy continues to be defined by a strong protectionist stance. If he wins a second term, expect this administration to impose even stiffer tariffs on US imports in a bid to reduce the trade deficit. Trump’s signature trade policy proposal in the campaign is a commitment to impose a 10% minimum tariff across all US imports. Trump also voiced support for targeting all imports from China with a 60% tariff. Recently, he also came out with a proposal to put 100% tariffs on countries who “leave the dollar.” These proposals go beyond economic protectionism; they are part of a larger strategy to reshape the global economic order in America’s favor. Trump’s vision focuses on economic self-sufficiency, where the United States depends less on foreign goods and more on domestic production.

The drastic action may partially be a ploy to keep trade partners off balance. During Trump’s first term, he was fond of using brash tactics to create leverage in trade negotiations. However, if Trump moved forward with his plan, protection for domestic producers would come at the expense of US consumers – at least in the short-term. The American Action Forum estimates that a uniform 10% tariff on US imports would cost American households between $1,700 and $2,350 annually. Meanwhile, a 60% tariff targeting Chinese goods alone would increase household costs by $1,950 annually.

Trump may also seek to implement tariff increases and other protectionist measures during the review of the US-Mexico-Canada Agreement (USCMA). The renegotiation of the trilateral, North American trade framework was one of Trump’s signature trade achievements, garnering bipartisan support in Congress. Yet the agreement must be reviewed and renewed by all parties in 2026. Trump may seek to find new ways to incentivize domestic US manufacturing, increase market access into Canada and Mexico, and prevent non-parties to the agreement from benefiting from USCMA provisions.

Other key elements of Trump’s trade policy include:

Managed trade agreements. Trump is a fan of “managed” trade agreements that outline specific export and import commitments for each party. Instead of reducing tariffs and trade barriers to allow the private sector to drive exchanges, Trump prefers to set trade targets through bilateral negotiations.
Direct negotiations with China. Trump prefers to negotiate with trade adversaries directly, rather than in a multilateral coalition. During his first term, he sought a managed trade agreement with China that received mixed reviews in the trade policy community. His direct approach to China is both a strength and a weakness. While it enables decisive action, it also risks alienating allies and complicating broader diplomatic efforts to contain China’s growing influence.
Skepticism of international institutions. Trump would not invest US government resources in global trade policy institutions, such as the World Trade Organization. Trump largely views global institutions as ineffective at best, and corrupt at worst. His approach to trade policy focuses on using the size and market power of the United States to coerce actions from trade allies and adversaries alike.

Vice President Kamala Harris

Vice President Kamala Harris presents a murkier policy outlook than former President Trump. As a candidate for the Democratic Party nomination in the 2020 election cycle, Harris tacked extremely far to the left on all matters of trade policy. In fact, Harris was one of only ten US Senators to vote against the ratification of the USMCA trade deal. Harris’ trade policy pronouncements at the time must be read through the lens of her presidential candidate bid. Prior to President Biden’s nomination, Harris sought to distinguish herself from a crowded Democratic field.

Nevertheless, Harris’ critique that USMCA did not go far enough on matters concerning the environment seems likely to endure. Harris is keen to use trade policy as a vehicle for fighting climate change and promoting better environmental standards across the globe. The position could have profound impacts on how the US approaches novel policy ideas, like the carbon border adjustment mechanism. The mechanism, popular in European policy circles, seeks to incentivize the trade of products with lower carbon footprints by adjusting import tariffs. Environmentally-friendly manufacturing practices would earn a product lower import tariffs compared to a competitor with higher emissions in the supply chain. The 2026 review of USCMA could provide ample opportunity for Harris to insert ambitious climate provisions in the deal.

With the exception of environmental trade policy, Harris is unlikely to deviate from the Biden administration’s overall trade orientation. Expect the focus to remain on domestic economic policy, with trade relegated to the back burner. Harris is unlikely to pursue ambitious trade and market access agreements. The days of a swashbuckling American trade apparatus reaching the far corners of the globe seem increasingly remote. Harris’ trade policy is likely to be cautious and gradual, emphasizing the protection of domestic industries and the promotion of sustainable practices. This less disruptive approach stands in stark contrast to Trump’s aggressive tactics, underscoring the philosophical differences between the two candidates.

Other key elements of Vice President Harris’ trade policy include:

Selective tariffs. The Biden-Harris administration kept many of Trump’s tariffs on China in place but rolled back many tariff increases impacting key allies. Harris would likely use tariffs as a selective tool, not a blunt instrument implemented across the board.
Investment in global alliances. Harris would continue President Biden’s approach to multilateral engagement, preferring to confront China and other trade competitors with a broad coalition. A Harris administration would also be more open to engagement in global trade institutions, including the World Trade Organization.

Analysis

Despite their vast differences on a wide range of policy measures, Trump and Harris share a strikingly similar worldview on trade policy. Both blame free trade policies of previous eras for causing direct harm to American workers and domestic manufacturers. No matter which candidate ends up in the White House, a protectionist outlook will remain. The size and scope of domestic manufacturing subsidies may differ, but continued skepticism of international trade will maintain pressure on companies to bring supply chains back to the US – or at least toward more friendly nations. This shift toward protectionism is not just a response to past trade policies but reflects a broader change in global economic thinking. The era of globalization, once seen as unstoppable, is now being reassessed due to new geopolitical realities, economic inequalities, and the pressing need for sustainability.

According to Forbes, nearly 70% of US companies are reconfiguring their supply chains to come closer to home. Not all the investment and production will come directly to the US. India and Vietnam are major beneficiaries of corporate efforts to diversify away from China. Mexico is likewise benefiting from the trend of supply chain resilience, which will continue under either administration. Mexico’s share of US imports continues to rise, reaching 15% in 2023. A successful review of the USMCA trade deal would only create further incentives for corporate investment in Mexico.

These changes in supply chain dynamics aren’t just about improving economic efficiency; they also represent a strategic adjustment as companies and governments work to reduce risks from geopolitical tensions and supply chain disruptions. The move towards regionalization, or “nearshoring,” is becoming a defining characteristic of the post-globalization era.

In a similar vein, neither candidate looks likely to pursue an ambitious set of trade negotiations. The US president currently lacks trade promotion authority, a provision of US law that enables the president to pursue expedited trade terms with allies around the world. The lack of trade promotion authority hardly matters to Trump, who prefers less ambitious managed trade agreements to massive, multilateral deals. For her part, a future President Harris is unlikely to upend the current Democratic focus on domestic investments and economic policy. The reluctance to pursue new trade deals reflects a growing skepticism about globalization’s benefits, a sentiment that spans across the political spectrum. As both parties adopt a more inward-focused economic approach, the chances for major new trade agreements decrease, suggesting a possible retreat from America’s role as a global trade leader.

The lack of new, global market access agreements could negatively impact export-oriented sectors of the US economy, such as agriculture. Sectors that have enjoyed success under liberalized trade policy frameworks may fall behind if other nations continue to enhance their market access expansion.

While similarities abound, astute investors will also be able to capitalize on clear divergences in specific economic sectors.

Start with the technology sector. In the last year, US trade policy began tilting away from supporting the major priorities of major American technology firms. Amidst concerns over the influence and power of Big Tech, the US government has softened its stance on foreign barriers to digital trade. The impact of digital trade on the American economy has continued to grow in recent years. Digital services delivered over $600 billion to the US economy and represents a clear area of trade surplus. Nonetheless, the Biden administration seems less willing to advocate against restrictions to cross-border data flows, data localization requirements, and obstacles to the provision of cloud computing services.

Interestingly, a Trump administration is likely to maintain a more adversarial approach to the interests of large, established technology companies despite his relationship with Elon Musk. Trump’s running mate JD Vance has been a consistent critic of the power of the technology sector. The Trump-Vance ticket would seem loath to actively promote industry priorities on the global stage.

In contrast, Vice President Kamala Harris could take a different tack. Her California roots come with deep ties to Silicon Valley and global technology titans. She is therefore more likely to be influenced by digital trade topics than President Biden, whose core constituency rests with blue collar workers in the Rust Belt and Northeast. Neither Harris nor the recent Democratic Party platform publicize any steps toward appeasement of the technology sector. However, the allure of campaign fundraising opportunities and home state appeal may prove to be a powerful force impacting Harris’ outlook on digital trade issues.

Trade policy choices by Trump and Harris will also create clear fault lines when it comes to green technology. Harris supports the explicit integration of climate policy goals into trade agreements. She measures trade agreements largely by their ability to promote environmental sustainability and incentivize carbon-neutral production practices. In stark contrast, Trump measures trade policy effectiveness strictly in terms of the impact on America’s trade deficit.

For this reason, Trump’s trade policy goals eagerly promote expanded exports of fossil fuels, including coal, oil, and natural gas (LNG). Trump also uses trade policy to prioritize the production of energy-intensive goods, such as steel and aluminum. Green technology is viewed as a secondary concern.

Compared to Trump, Harris’ goal of integrating climate and trade policy goals will take center stage. Trade agreements will be used to incentivize the global production and trade of clean energy technologies, such as electric vehicles, solar panels, and renewable energy infrastructure. This shift places green technology at the forefront of trade policy, seeking to make the U.S. a leader in the global transition to a green economy.

Harris’ desire to rapidly expand adoption of green technology and produce more green technology in the United States could create tension. For example, adoption of electric vehicles could be expedited by importing cheap, effective models from China. But such an approach would stand at odds with the domestic manufacturing agenda. Trump’s trade policy suffers no such contradictions. Winning the global economic competition against China takes primacy over climate goals. For Trump and his allies, prioritizing green technology is a dangerous sideshow that only hampers US competitiveness in the race for economic supremacy. The conflict between economic nationalism and environmental sustainability will shape trade policy debates in the coming years. The decisions made by the next administration will have significant consequences for the future of the U.S. economy and its role in the global shift toward sustainability.

Wrap-Up

The contrast between Trump and Harris’ trade policies reflects broader differences in their economic philosophies. Trump’s approach prioritizes traditional American industries through broad tariffs and managed trade deals. Domestic industrial producers and fossil fuel exporters stand to gain tremendously from another round of Trump trade policy. On the other hand, digital and green technology firms may be left on the outside of a future Trump administration. Trump’s trade policies are part of his broader economic agenda, aimed at reviving American manufacturing, reducing the trade deficit, and asserting U.S. dominance globally. However, this approach could potentially harm export dependent emerging industries and sectors that are vital to the future of the US economy.

Vice President Harris shares Trump’s protectionist mindset. However, her emphasis on integrating trade and climate policy clearly sets her apart. A wide range of firms in green technology fields, including renewable power and electric vehicles, are likely to garner sympathetic treatment from Harris’ trade policy approach. Major technology firms are also likely to generate an increased prioritization of their digital trade issues. Harris’ trade policies reflect her broader vision for a sustainable and inclusive economy. By focusing on environmental goals and promoting innovation in green technology, she aims to make the United States a leader in the global shift toward sustainability. However, her approach will need to carefully balance domestic economic interests with global environmental objectives.

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I'm Andy Busch

If things feel crazy in the world today, that's because they are. We are seeing huge shifts in risk and reward, leading to a lot of economic uncertainty and confusion about where we go from here.

As an economic futurist, I do things a bit differently than your typical economist — going beyond analyzing how today's financial policies impact economic growth, to focus on the super-charged trends driving much of today's global chaos and change.

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