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Former United States Trade Representative Katherine C. Tai said at a Harvard talk on Wednesday that the Biden administration set in motion a reversal of decades of neoliberal economic policy that has persisted under President Donald Trump’s second term.
Tai, who served for four years under President Joe Biden, said that the first Trump administration’s trade policies — which included the rollback and replacement of the North American Free Trade Agreement — made it impossible to return to policies that had been mainstream since the 1980s.
“Having lived through the Trump administration the first time and the Trump trade policies and the renegotiation of the NAFTA and taking on the competition with the Chinese economy, it was very clear to us — and by us, I would say, President Biden himself and those on his trade team — that there was no going back,” Tai said.
At Wednesday’s talk, which was hosted by the Mossavar-Rahmani Center for Business and Government, Tai said she took a “bottom up, middle out” approach to economic policy, rather than expecting wealth to trickle down to workers. She delivered a confident defense of Biden’s trade policy but occasionally found herself on the defensive against her fellow panelist, Harvard Kennedy School professor Robert Z. Lawrence, who did not hold back his criticisms.
Tai described Trump’s approach to foreign policy in his first term as destructive but said that her focus on bringing in workers who felt like they were “given short shrift” by mainstream economics meant that she sometimes decided to continue down the course that Trump had set.
“That meant also not being always 180 degrees opposed to what Trump had done, but to see what he had done in the breakage, and then to figure out how to fix and mend what needed to be fixed and mended,” Tai said.
Tai also took Trump to task for his approach to trade in his second term — though only briefly.
“I really have a problem with ‘tariffs are never appropriate’ and ‘tariffs are always appropriate,’” Tai said. “So I’m going to ding the neoliberal perspective, which is ‘tariffs are always terrible.’ And then I’m also going to ding what seems like the Trump two perspective, which is ‘tariffs are great, and you can always turn to them for solutions.’”
She praised the U.S.-Mexico-Canada Agreement — which was signed by Trump in September 2018 and took effect nearly two years later, replacing NAFTA — as “profound,” saying it represented unusual political cooperation between congressional Democrats and Trump on behalf of workers’ interests.
The USMCA included a series of labor reforms that went significantly further than NAFTA requirements — requiring that Mexico recognize rights to collective bargaining, establish independent labor courts, bar employer interference in union activities, and enforce laws against compulsory labor.
“For the first time, industrial workers in Mexico, American workers, have the opportunity to empower themselves, uniquely through a trade agreement,” she said. “There is no other mechanism like this.”
Tai also praised the Biden administration’s domestic economic policy, pointing to the 2021 Infrastructure Investments and Jobs Act, a $1.2 trillion bill that funded repairs to highways and ports, the development of electric vehicle infrastructure, and the expansion of passenger rail.
But Lawrence pushed back on Tai’s characterization, saying the Biden administration’s steps toward protectionism were counterproductive. Lawrence said Biden had focused on stimulating manufacturing job growth, but by the end of his presidency, there was little to show for his efforts: Manufacturing employment had not substantially changed from its pre-Covid-19 level.
“The proof of the pudding is kind of in the eating,” he said.
Lawrence also argued that by focusing on protections for some workers, the Biden administration’s trade policy neglected the big picture. Higher trade barriers passed on costs to consumers and lowered living standards for Americans, he said.
He said the globalization of supply chains meant that tariffs would inevitably have ripple effects that would likely depress employment across the board.
“If you put taxes on input as important as steel and aluminum, and you keep them in place at levels like 50 percent you are going to perhaps preserve some steel and aluminum jobs — although, if you look at the data, not all that many — but actually damage the competitiveness of many other parts of that supply chain,” he said.
Lawrence also said that Biden had retreated from global institutions, like the World Trade Organization, that could protect international labor rights more effectively than individual agreements.
Tai said Lawrence’s assessment of Biden-era policies was “unfair” and that many of their effects would take time to appear in economic data.
“The fruits of that infrastructure law will manifest into the future, beyond the time of the Biden administration,” Tai said. “It takes time to build and it takes time to rebuild, right?”
At points, the talk grew heated, with Tai accusing Lawrence of using “fighting words” that denigrated the Biden administration’s accomplishments.
“It is not a new experience for me to have very smart people stand up and tell me that everything we were trying to do was ill conceived, was economically unsound, was dumb, was apparently not what we were trying we were intending to do,” she said. “The weight of the establishment and established thinking is staggering, and it’s particularly galling in a time when everything around us in the world is changing.”
