With Joe Biden’s victory in the US presidential election, Donald Trump’s “America First” doctrine will be jettisoned, and Biden will seek to return the US to pre-Trumpian norms.
That is expected to mean a return to the Paris climate accords, the Iran nuclear deal, and perhaps even the Trans-Pacific Partnership.
For US allies who felt ignored, castigated or simply befuddled by Trump, a Biden administration will offer the comforting prospect of once again working with familiar faces in the collegial club of global elites.
For China and much of the rest of Asia, a Biden administration is expected to be less ideological and more willing to seek constructive solutions to problems.
The challenges in the Sino-US relationship will not have magically gone away when Biden takes over, and negative public sentiment and political realities in relation to China are now so entrenched in the US that no major substantive policy changes may be possible.
However, under Biden the tone will change, and that alone should create an environment where dialogue may be both more possible and more productive.
Back to normal?
As fate would have it, Biden and his fellow Democrats again find themselves assuming power in the wake of a global economic downturn.
In 2009, it was in the immediate aftermath of the global financial crisis. Now it is in the midst of renewed lockdowns across Europe and the US in an effort to try to stop the second wave of Covid-19 infections from overwhelming the health-care system.
It will likely take many months into the Biden administration for vaccines, produced in record time under the Trump administration’s Operation Warp Speed, to bring the US, its allies in the other major industrialized nations and other affected parts of the world “back to normal.”
So there are two parts to the Biden administration’s goal of getting things “back to normal.” There is the pre-Trumpian globalist “normal,” and then there is the pre-pandemic “normal.”
At some point, he and other Western leaders will have to explain why China and other parts of Asia have been “back to normal” since the late second quarter of 2020, while a return to “normal” in the US and Europe now is not projected to occur until Q3 2021 at the earliest.
Politicians always deflect blame for problems. Trump blamed China for the pandemic. Biden will blame Trump for any pandemic-related problems going forward, so even if he were so inclined (which seems not to be the case), he may not need as a matter of political expediency to be as critical of China’s initial handling of the virus.
In any event, President Biden will have to play the cards he has been dealt, and his performance will be measured by actual results.
Impact on global trade
A key component of the global system is trade, and the system is designed to promote more open trade in order to increase global trade volumes and economic development.
Trump’s “America First” doctrine is generally understood to be nationalist, protectionist and anti-globalist in nature and thus presumably anti-trade. His use of tariffs as instruments of trade warcraft similarly has been criticized as antithetical to sound economic and trade principles.
Conversely, Biden’s promise to re-engage with allies in the global system suggests a return to more traditional global trade policies.
However, historical trade statistics over the last decade paint a picture that suggests that continued growth in global trade may not be directly tied to who is in the White House.
During the Obama-Biden years, after a steep decline in global export trade volumes in 2009 following the global financial crisis, global exports rebounded rapidly to set new highs over a period of four consecutive years from 2011 to 2014, ultimately reaching a peak of US$18.986 trillion in 2014.
In contrast, in 2015 and 2016, global trade volumes declined by more than 15%, putting global trade levels back on par with pre-crash levels and erasing all the gains in the preceding years.
Global exports shot back up in the first two years of the Trump administration to set a new high of nearly $19.5 trillion in 2018, before suffering a 1% drop to in 2019, at the height of the Sino-US trade war. At roughly $19 trillion this was still the second-highest total all time.
While this is an over-simplistic analysis, by this measure the sustained long-term upward trajectory of global trade volumes appears to have been generally impervious to Trump’s unorthodox approach to trade negotiations, at least in the short term.
On the other hand, China was clearly negatively impacted by the trade tiff with the US. Looking just at trade between China and the US, trade declined from $630 billion in 2017 to $560 billion in 2019, dropping bilateral trade figures to 2013 levels, but this was still five times what it was in 2001.
Global trade: an irresistible force
Then along came a virus. In April of this year, global trade volumes plummeted a remarkable 12.2% in one month. To put this in context, from January 2010 the monthly change in trade volume had been characterized by an alternating series of small peaks and valleys, generally with month-on-month increases of no more than 2.5% and decreases of less than 2% (and even these values were outliers, with percentage changes for most months hovering between 1% on either the positive or negative side of the ledger).
In light of the precipitous drop in trade volumes due to the pandemic, the World Trade Organization projected in April that trade volumes were set to plunge by between 13% and an almost unimaginable 32% for full-year 2020.
This dire forecast by WTO experts failed to recognize the apparently unstoppable momentum of global trade, even in the midst of a global pandemic.
In May, the monthly decline in trade volume was only 0.9%, and by June trade volumes had jumped back into the plus column, rising 7.9%, followed by smaller but still historically high rates of increase over the next four months. By early October, the WTO had revised its guidance to forecast an overall 9.2% decline in trade in goods for 2020 followed by a 7.2% rise in 2021.
The forecast drop for 2020 is still sobering, but pales in comparison with the more than 22% decline in global trade in 2009 after the global financial crisis. The forecast 2020 drop is also smaller than the two-year decline of more than 15% in the last part of the Obama-Biden administration.
Some additional historical perspective is required to more fully understand the irresistible force of global trade. Even with the modest decline from 2018 as noted above, global trade for 2019 was still up more than 350% over 1995 levels ($5.19 trillion), and a remarkable 6,300% higher than 1970 levels ($302.3 billion).
It appears (at least so far) that not even a pandemic can stop the long-term growth of global trade. As author and columnist Zachary Karabell presciently commented in March, when we assess the prospects for global trade going forward in the full historical context, it would appear more plausible that “the post-coronavirus future will see not an end to the globalizing trend of recent decades but a new chapter in that story.”
Stated otherwise, if Trump and Covid-19 did not derail global trade, maybe nothing can.