Trading Away Prosperity? The Trump and Harris Approach to Global Markets

In a global landscape marked by supply chain shifts, rising state-led economies, and new geopolitical frictions, America’s trade policies have been a focus of the news cycle this presidential campaign season. Both Donald Trump and Kamala Harris have proposed anti-free trade approaches, and these strategies raise questions about the implications for markets, individual choice, and the true cost of protectionism. Let us take a look at how their records stack up.

Trump’s Presidency: Tariffs and Trade Wars

When he was in office, Trump’s administration took an interventionist approach from day one. Trump began by withdrawing the U.S. from the Trans-Pacific Partnership (TPP) and “declared an end to the era of multinational trade agreements.” Presumably, there would be several trade agreements with individual allies in their place. Although bilateral deals are easier to negotiate, multilateral trade agreements are generally preferable, all other things being equal. Multilateral agreements open access to larger markets and reduce transaction costs associated with navigating the thicket of rules caused by one-off agreements.

Perhaps the most significant feature of Trump’s trade policy was the 2018 trade war with China. His administration imposed tariffs on $350 billion of Chinese goods, to which China retaliated with tariffs on $100 billion of U.S. exports. Trump now promises to go further and has since proposed escalating these tariffs to 60% on all Chinese imports—a move many economists believe could throttle Chinese exports to the U.S. almost entirely, increasing costs for American consumers and businesses. 

After a 15-year dispute, the administration applauded a WTO ruling that allowed the United States to “impose countermeasures” on select goods from the European Union. In 2019, the Trump administration put a 10% tariff on aircraft materials and 25% on agricultural and other products.

In 2020, Trump’s administration renegotiated NAFTA, resulting in the USMCA. This agreement included stricter labor provisions but was largely an “update” rather than a radical departure from what Trump famously called “the worst trade deal maybe ever signed, anywhere,” thereby giving some industries, especially agriculture, more continuity.

Recently, Trump threatened tariffs of up to 100% on nations for “leaving the dollar.” Trump’s other plan, a proposed universal tariff on all imports, would be another massive tax on trade that could stifle competition and innovation, creating a market dominated by government control. Reducing exports sounds like a good thing to some, but this view is fallacious and views trade as a zero-sum game. Tariffs are not the correct remedy for “trade manipulation.” It is important to recognize that tariffs on foreign goods hurt Americans and there are no winners in trade wars. These broad-brush tariffs tend to centralize economic control and limit consumer choice, with unintended costs often borne by American citizens through higher prices. American manufacturers who depend on export markets are also hurt when they rely on foreign imports to make their wares.

The Biden-Harris Administration: Continue Trade Policies?

As a Senator, Harris opposed both the TPP and the USMCA, arguing that neither of those agreements “protected American workers and our climate.” Harris says she is not a “protectionist Democrat.” Yet, as Vice President, Harris has seen the Biden administration retain many of Trump’s trade barriers, particularly on China. While Biden temporarily suspended tariffs on European goods, he reimposed tariffs on $18 billion worth of Chinese imports in 2023, primarily targeting tech-heavy sectors like EVs, semiconductors, and solar cells.

This policy was coupled with new industrial programs, such as the CHIPS and Science Act, which poured over $860 billion in federal spending into sectors like clean energy and semiconductor manufacturing. Proponents argue that these policies can promote domestic manufacturing and clean energy through business incentives. But such incentives inevitably distort markets since they use taxpayer funds to bolster politically selected industries, risking inefficiencies and stifling private-sector competition. In an interview with Fox News, Harris insists that her presidency will not be an extension of Biden’s administration. Elsewhere, however, it seems likely that she would continue to favor government intervention in international trade rather than rely on markets and voluntary exchange. 

America’s Long-Standing Competitor

Talk of China’s “state-led, non-market” approach has long been a thorn in the side of free-trade proponents. Unfortunately, it has become common for politicians to say something to the effect that they like free trade, but they believe in and emphasize “fair trade.” The implication is that due to other countries subsidizing their industries or using their own protectionist measures, we are not in a position to enjoy free trade. The idea is that we must first rectify these distortions with our own protectionism before we can have free markets. The U.S. Trade Representative’s latest report to Congress continues to identify the same issues: subsidies, forced technology transfers, and other distortive practices that challenge international trade norms and WTO rules. Harris has called for WTO reforms aimed at preventing China from gaming the system, yet these reforms merely add more layers of regulation. 

A fully confrontational approach—especially one involving extensive tariffs—could isolate American firms from a global market of over a billion consumers while doing little to change China’s economic behavior. 

Looking Forward

It is clear that trade regulations are frequently viewed as a carrot-and-stick tool for countries. It would be naive to suggest that all aspects of trade agreements actually achieve economic liberalization. Special interests can and do capture trade rules, but that does not imply that trade agreement projects should be abandoned. They do achieve positive results.

History suggests that open trade helps yield the best outcomes for economic growth and individual prosperity. It was vital to America’s development. Economists from virtually every stripe have warned against trade restrictions, arguing that they harm consumers and lead to unintended consequences. Even Paul Krugman has the famous line, “If there were an Economist’s Creed, it would surely contain the affirmations ‘I understand the Principle of Comparative Advantage’ and ‘I advocate Free Trade.’” Trump’s tariffs and Harris’s preference for state-led initiatives run contrary to this legacy, risking a shift away from a truly free market toward managed trade and industrial policy.

It is worth asking of Trump and Harris: Will their trade policies empower American businesses and individuals to compete freely, or will they continue a cycle of heavy-handed government intervention? Time will tell.