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Overall, the public’s attitudes about trade have changed little since 2021. However, Republicans’ views have become more negative.

Nearly three-quarters (73%) of Republicans and Republican-leaning independents now say the U.S. has lost more than it has gained from increased trade. That is 8 percentage points higher than in 2021.

Democrats and Democratic leaners remain divided on this question. Half of Democrats say the U.S. has gained more than it has lost, while 47% say the opposite. Democrats were similarly divided on this question in 2021.

Demographic, educational differences in views of increased trade

Americans with at least a four-year bachelor’s degree are more likely than those with less formal education to say increased trade with other countries has more benefits than costs for the U.S.

Nearly half of college graduates (47%) say the U.S. has gained more than it has lost from increased trade, compared with about a third of those with less education (31%). These differences are evident in both parties.

There also are differences in both parties by race and ethnicity as well as family income. And Republicans differ by age on this issue.

Among Democrats

• 60% of Asian and 53% of White Democrats say the U.S. has gained more than it’s lost from more trade. Hispanic and Black Democrats are less positive about the impact of greater trade (45% and 42%, respectively, say the U.S. has gained more than it has lost).
  
  
• Upper-income Democrats (62%) are more positive about the impact of increased trade than are middle- (52%) or lower-income Democrats (42%).

Among Republicans

• White Republicans are particularly critical of the growth in international trade: Just 22% say the U.S. has gained more than it’s lost. About a third of Black and Hispanic Republicans also say this (35% and 33%, respectively), as do 49% of Asian Republicans.
  
  
• There are relatively modest differences among Republicans by income, but upper-income Republicans are somewhat more likely than middle- and lower-income Republicans to view increased trade positively.
  
  
• Younger Republicans are more likely than older Republicans to say the U.S. has gained more than it has lost from increased trade.

Trade is a low-priority issue for most Americans

While trade with other nations is an issue in the 2024 presidential campaign, it is not a top concern for most Americans. In our 2024 policy priorities survey, dealing with global trade ranked near the bottom of 20 policy goals asked about.

In our April survey, we asked respondents to weigh the benefits of more trade (“it has helped lower prices and increased the competitiveness of some U.S. businesses”) against the drawbacks (“it has cost jobs in manufacturing and other industries and lowered wages for some U.S. workers”).

Another recent survey by the Center found considerable public skepticism about the benefits from U.S. trade with China, but not with Canada. Nearly half of Americans (47%) said China benefits more from the U.S.-China trade relationship than America does. Only 14% said the same of U.S. trade relations with Canada.

When asked about free trade agreements generally – without context – Americans are more supportive: In July, 65% of Americans say that, in general, free trade agreements between the U.S. and other countries have been a good thing. But there are wide partisan differences in these opinions. Roughly eight-in-ten Democrats (79%) say free trade agreements have been good for the U.S., compared with only about half of Republicans (53%).

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Introduction

As the danger of war rises in the Western Pacific, the United States is racing to reset its military strategy. China’s astonishing military modernization—especially its arsenal of anti-access/area denial (A2/AD) capabilities—has fundamentally challenged the old U.S. approach, which focused on defeating aggression by projecting decisive power into the first island chain. In response, the Pentagon is attempting a great inversion: to defeat Chinese power projection against Taiwan or another target, it is emulating Beijing’s A2/AD strategy in hopes of making the Western Pacific a no-go zone for hostile forces.

This change, which some defense analysts have advocated for years, is a necessary response to China’s daunting capabilities. It is a smart effort to make the geography of the region, and the inherent difficulty of power projection, work for, rather than against, the United States and its allies. Speed is essential in making this shift: Even as the stated U.S. view is that conflict is “neither imminent nor inevitable” in the Taiwan Strait, numerous U.S. officials have warned that conflict could plausibly occur in the region this decade. This urgency is catalyzing constructive action across multiple U.S. alliances and every U.S. military service as they seek to make the strategy real in the limited time that may be left.

Every strategy brings dilemmas, though, and this strategy—call it “anti-access with American characteristics”—presents six crucial trade-offs the Pentagon and U.S. civilian leaders must address. Many of these challenges, moreover, must be confronted in coordination with U.S. allies and partners, but these conversations are not as advanced as they should be given the shrinking timeline and urgency of action. Strategy is the art of making hard choices, and the United States is only starting to reckon with the hard choices its new strategy involves.

Washington’s Strategic Shift

U.S. strategy has been turned upside down by two key developments: China’s ballooning defense budget and its military-technological breakthroughs. Using defense resources made available by decades of rapid economic growth, the People’s Liberation Army (PLA) has developed a vast arsenal of capabilities—especially long-range missiles—designed to prevent U.S. forces from accessing bases along the Pacific’s first island chain, as well as in the waters and airspace within them. According to the Pentagon’s most recent public report on Chinese military power, for instance, Beijing now possesses roughly 1,000 medium-range ballistic missiles with a range of between 1,000 and 3,000 kilometers and 500 intermediate-range ballistic missiles with a range of between 3,000 and 5,500 kilometers. If a war were to break out, the PLA could now target nearly all U.S. forces within hundreds of miles of the Chinese coast.

The result is a weakening of America’s ability to project power in a crucial region. A quarter century ago, China could barely detect, let alone destroy, U.S. aircraft carriers operating near its coast. Into the early 2010s, the Pentagon could—according to think tank reports—pursue a strategy that envisioned defeating Chinese aggression with a devastating precision-strike campaign against radars, missile bases, command-and-control centers, and other targets on Chinese soil.

Today, however, Beijing can threaten aircraft carriers hundreds of miles away, as well as the surface ships that escort them and the bases they visit. A growing inventory of advanced fighters, as well as the world’s densest air defense network, can take a heavy toll on U.S. strike aircraft. Meanwhile, China’s rapid nuclear buildup makes the prospect of carrying the war onto its territory much riskier by giving Beijing more credible nuclear response options. In short, the days of easily projecting power to China’s shores are over.

The United States needs new capabilities and concepts—as well as enhanced coalitions—to offset this historic change in the military balance. To be sure, the United States will continue to require ways of breaking down China’s battle networks and degrading its A2/AD capabilities. But simply doubling down on the traditional power projection strategy will not work under the current defense budget and in view of how formidable China’s A2/AD capabilities have become. Instead, U.S. forces are trying to flip the script: they are trying to deny China the ability to project its power outward. Rather than rely so heavily on a few large, vulnerable bases and scarce, expensive platforms like aircraft carriers, this strategy would empower smaller units that operate from more austere locations and fight with cheaper, more numerous, and more expendable weapons. The goal is to create a more resilient, diversified military posture up and down the Western Pacific with sufficient firepower to inflict an awful cost if the enemy attacks. The United States will not be able to reassert the level of military dominance it once enjoyed in the region, but it can prevent an age of Chinese dominance.

What makes this approach attractive is the fact that holding U.S. forces at bay is only half the challenge China faces. To conquer Taiwan or otherwise upend the regional status quo, Beijing must replicate the traditional U.S. mission of power projection by moving troops, ships, and planes into hostile areas and sustaining them there indefinitely. In fact, Beijing is in the process of fielding four aircraft carriers with more to come; it is building other long-range ships and aircraft that can operate throughout the region and beyond. The more China invests in these larger, more expensive platforms and the more it tries to exert control in the Western Pacific, the more it makes itself the target of the very strategy its own military has employed.

The United States has recently advanced several aspects of such a strategy. The first is real estate. Washington has secured or expanded U.S. access to bases in countries from Japan and the Philippines to Australia and Papua New Guinea, a crucial step in making U.S. forces more survivable if China attacks. There is significantly more work to do, but 2023 has been the most transformative year in a generation for America’s Indo-Pacific posture.

The second aspect is capabilities. The Pentagon has announced programs such as the Replicator initiative, which seeks to build large numbers of small, cheap drones that can deliver devastating firepower. If these programs reach fruition, they could complement existing platforms, such as attack submarines and penetrating bombers, that can destroy Chinese forces within Beijing’s A2/AD zone.

A third aspect involves concepts. The services are developing new (and somewhat embryonic) ways of employing these technologies. Examples include Expeditionary Advanced Base Operations, a Marine Corps initiative that involves using antiship missiles and other ground-based fires to target Chinese vessels from small islands in the Western Pacific, and Agile Combat Employment, an Air Force project that aims to preserve U.S. striking power by getting planes off of large, exposed bases when a crisis begins.

And fourth is coalitions. To generate the necessary firepower, secure access to critical terrain, and confront China with the prospect of a big war against multiple adversaries, the United States has strengthened bilateral alliances with Australia, Japan, South Korea, and the Philippines while also investing in new partnerships—such as AUKUS—linking countries in the region and beyond.

To be clear, anti-access with U.S. characteristics is more of a complement to than a pure replacement for the Pentagon’s old approach. Aircraft carriers and major surface combatants would be needed to defeat a Chinese blockade of Taiwan, for instance, even if they suffered heavy losses. Tactical fighters, long-range bombers, and other manned aircraft will play an important role in delivering munitions and partnering with unmanned systems. The United States will still need to find ways of suppressing China’s air defenses and hindering its kill chains. But legacy approaches alone cannot defeat a Chinese attack at acceptable cost. The United States needs asymmetric ways of thinning out enemy forces and preventing them from achieving their objectives.

To succeed, the United States will need a two-part force. A blunting layer of dispersed forces must survive the initial onslaught and prevent Chinese forces from winning a quick, decisive victory. Then a follow-on force of U.S. ships and aircraft will need to push into the theater to decisively defeat the remaining Chinese units. Ultimately, this might not be sufficient to terminate a conflict, but it would neutralize the immediate threat and buy time for other options meant to persuade Beijing to call it quits, such as a long-term economic pressure campaign.

America’s new strategy, however, also raises new questions: Can a blunting force remain effective if it is exposed to devastating Chinese missile salvoes and cannot easily be resupplied? Could these smaller units deter a conflict as well as larger and more visible ships and aircraft could? Should U.S. power projection forces remain in the first island chain or pull back to more defendable positions farther away? How hard should the United States push for access to new bases? Are allies prepared to play their part in this new strategy? And to what extent would anti-access with U.S. characteristics just redirect China’s effort toward gray zone coercion?

These are difficult questions. They involve hard trade-offs between survivability and lethality, concealing and revealing, close-in and standoff operations, speed and sustainability, sovereignty and efficiency, and gray zone and high-intensity conflict. As the United States tries to prepare for or, preferably, deter a potentially devastating conflict, these six issues require urgent attention and debate.

Survivability or Lethality

A fundamental feature of today’s environment is the development of accuracy independent of range, which makes it possible to precisely strike targets at great distances. This is why China’s ballistic missile force, the largest in the world, poses such a threat to the aircraft and surface ships that the United States would need to project power into the Western Pacific. Hardening airfields and investing in air and missile defenses can help, but the cost-exchange ratio favors the attacker, since most missiles are significantly cheaper than the interceptors that engage them. If U.S. forces remain on large bases at Guam or Okinawa, they risk being destroyed. Military units must disperse and hide to survive. The dilemma is that once they do, they will struggle to generate the striking power—the lethality—needed to defeat a Chinese assault.

This problem involves logistics and sustainment: the more dispersed one’s forces, the harder it is to keep them well supplied. The Air Force, for instance, has shown it can get attack aircraft out of vulnerable places in a hurry. Less certain is whether it can deliver the fuel, weapons, and other support those planes will need to conduct combat missions from wherever they go to ride out the storm. If U.S. planes cannot fly strike missions in the opening days or weeks of a Taiwan crisis, Taipei might fold and close Washington’s window to respond. Similar challenges afflict the Army’s Multi-Domain Operations concept.

To be fair, the picture varies across the services. By making significant changes to its force structure, the Marine Corps has become better positioned to distribute small units across numerous islands while also equipping them with real firepower. Yet services that rely on large platforms (the Navy), large bases (the Air Force), or large formations (the Army) have more work to do to make their forces survivable without undermining their ability to land a lethal punch.

Conceal or Reveal

As new operational concepts take shape around smaller, more dispersed units, the Pentagon will face another challenge: how to deter China with less visible forces. The accuracy of today’s weapons means visible forces are increasingly vulnerable, but the best capabilities for deterring opponents and reassuring friends are those they can plainly see. Alternatively, concealing capabilities can help maximize their effect on the battlefield but undercuts their deterrent value before a conflict begins.

Take, for example, one of America’s most effective deterrents—the purported ability to disrupt Chinese power projection by using cyberattacks to disable PLA command, control, and communications. Disclosing the details of this capability would require revealing U.S. access to Chinese networks, which would give Beijing a chance to close breaches. The same basic problem would apply to revealing new operating locations or highly secretive systems, such as advanced undersea drones, stealthy aircraft, space-based capabilities, and others.

A related issue involves timing. Unveiling new capabilities during a crisis might bolster deterrence but could come too late, after Chinese leaders have made the crucial decision to act. Publicly revealing new capabilities in the opening phases of a crisis could increase tensions, complicate efforts to deescalate, and lead third parties to blame Washington for the conflict. Admittedly, these are not new problems. But they are made more difficult by the fact that the United States no longer has such overwhelming conventional superiority, so it must hold more in reserve to surprise Chinese military commanders and complicate their operations after the shooting starts.

Close-in or Standoff

A third trade-off involves geography: Where should the United States place these more dispersed forces? For decades, U.S. power projection was so effective that even massed forward-deployed forces were largely invulnerable to enemy attack, and U.S. dominance was so pronounced that even faraway forces could reach the theater in time to make the vital difference. Today, however, China could do catastrophic damage to the Pentagon’s forward-most forces, whether they be ships near the Taiwan Strait or units on the ground in Okinawa. Moreover, if China can quickly establish dominance in and around the Taiwan Strait, assets stationed farther away might not arrive soon enough to prevent a fait accompli.

Thus, the dilemma: if the United States stations most of its combat power along the first island chain, the PLA could conduct a crippling first strike. Yet if Washington keeps the bulk of its forces over the horizon at bases in the second island chain or even farther away, then China might be emboldened to try the fait accompli. Of course, if Beijing chooses to kill a large number of Americans in a first strike, it is probably choosing a long, bloody war with an enraged superpower as well. But even in that case, U.S. allies would face the possibility of being pounded as U.S. forces fight from distant locations—not exactly a recipe for alliance cohesion in a crucial moment.

An answer—albeit an uncomfortable one—is to divide U.S. forces into two elements. Some units would serve as frontline forces to blunt Chinese attacks and reassure allied publics. These forces would constitute a bulwark and a trip wire: they would deny China the option of using force without bloodying U.S. personnel. They would commit the United States to the fight while also giving Washington some combat power early on. The objective of these forces would not be to establish U.S. dominance within the first island chain but rather to prevent China from dominating portions of the first island chain itself. Mobile forces equipped with antiship and antiaircraft missiles would blunt Chinese attacks on U.S. allies and partners.

Ultimately, this blunting force would also buy time and serve as a shield behind which standoff forces, such as long-range stealth aircraft or other platforms capable of delivering munitions from a distance, could operate at somewhat decreased risk. Unfortunately, the costs to these close-in units could be very high, so the United States might not want to place its most advanced capabilities at risk—fifth-generation tactical aircraft, or aircraft carrier strike groups, for instance—until it has succeeded in degrading China’s A2/AD capabilities, primarily through strikes delivering from longer range. In the meantime, forward-stationed forces might suffer ghastly losses.

Speed or Sustainability

A fourth trade-off is political. Washington’s new strategy is predicated on rapidly diversifying U.S. operating locations from a handful of major U.S. bases to a range of ally and partner bases, austere sites, and even some civilian facilities. The United States has made remarkable progress in this endeavor; key allies like Japan are expanding their military footprints as well. Yet the harder Washington pushes to make use of these locations today, the more it risks damaging critical relationships.

This tension is on display in Japan’s southwest islands. Okinawa, Miyako, Ishigaki, and Yonaguni are critical real estate given their proximity to Taiwan. If the United States could, for instance, station hordes of long-range antiship missiles on the outermost islands, the military balance in the Taiwan Strait would change overnight. But populations on some of these islands are ambivalent about a growing Japanese military presence, let alone any sizable deployment of Americans. If Washington pushes too hard, it risks alienating local populations and causing diplomatic setbacks. If Washington does not push hard enough, the United States and its allies might not be ready if a conflict comes.

The same point could be made regarding the Philippines. Under President Joe Biden, the United States has made remarkable progress in jump-starting implementation of the Enhanced Defense Cooperation Agreement and gaining access to additional facilities in that country. In theory, these facilities—some of which are on the northern island of Luzon—could play a vital role in a Taiwan contingency. In reality, what access the United States would have to those facilities in a crisis remains uncertain. The more tensions increase, the greater the need for the United States to have clarity about this issue and to position more (and more capable) forces there. Those needs may clash, however, with the political incentives of the government in Manila, which would presumably prefer to defer hard choices that could put local communities in the firing line if conflict ensues.

Sovereignty or Efficiency

Allies and partners are central to U.S. strategy because the China challenge is more serious than anything the United States has faced in decades. Beijing can field a force so large and potent that the United States cannot succeed on its own. Even under the most favorable assumptions about the development of U.S. and Taiwanese capabilities, the United States will still need—at a bare minimum—access to bases in Japan and perhaps other countries. Yet, after several decades in which allied contributions were a “nice to have” but not a “need to have,” there is little muscle memory in Asia about how to conduct complex coalition operations in a high-intensity environment.

Getting the coalition dynamics right requires addressing tough questions about roles, missions, capabilities, and—most of all—politics. Which allies would be willing to commit their forces in advance of a conflict? Under what circumstances would they do so? And with what caveats about their use? The answers to these questions will vary greatly from country to country, even from leader to leader. And although it seems likely that close allies, such as Japan or Australia, will indeed side with the United States if shooting starts, their leaders are often unwilling, for understandable political and diplomatic reasons, to make that commitment explicit in advance.

Ideally, a U.S.-led coalition would maximize efficiency: Washington would rely on allies to build niche capabilities and focus on particular missions, freeing up U.S. forces for the most daunting tasks. A similar argument has been made for why Taiwan should ditch its expensive planes and warships, which will probably be destroyed or disabled at the outset of any conflict, and instead focus on antiship missiles, mines, and other asymmetric capabilities that can help it survive until help arrives. But Taiwan is hesitant to do this because it has no ironclad assurance help will come—not even from the United States.

This illustrates the larger dilemma: if no one really knows who will or will not fight in a crisis, a clean division of labor becomes dangerous because absent allies would create glaring gaps. Political leaders in the Western Pacific naturally want to preserve flexibility and protect sovereignty. Yet this undermines efficiency by forcing Washington to plan for the possibility that its allies will not show up. The dilemma works the other way as well: the less reliable the United States seems due to resurgent isolationism or political dysfunction, the less willing its allies will be to make potentially costly commitments to fight by its side.

Gray Zone or High Intensity

A final tension is between dealing with day-to-day gray zone challenges—maritime coercion, menacing aerial intercepts, and other pressure tactics short of war—and preparing for the potential outbreak of a major conflict. Gray zone engagements require frequent sorties, which wear down aircraft and their crews. There is a real trade-off between showing the flag in the South China Sea and training for high-intensity conflict. The Pentagon’s preference may be to concentrate intently on deterring high-intensity conflict—the fight that the United States simply cannot afford to lose—but even if it does so successfully, its friends will still suffer as Beijing salami-slices the status quo.

For example, the U.S. military is heavily focused on a potential war in the Taiwan Strait, most notably the challenge of rapidly sinking an invasion fleet. But although this is the most dangerous contingency, it is not the only, or perhaps even the most likely, one. Every day China is squeezing Taiwan, using a high operations tempo and boundary encroachment to nibble away at its buffer zones. Likewise, the challenge in the South China Sea is not a matter of Beijing mounting an all-out invasion of the Philippines. It involves using fishing boats, maritime militia, coast guard vessels, and other capabilities to undermine sovereignty.

Unfortunately, many of the capabilities needed for gray zone scenarios are different from those needed for high-end deterrence missions. Small units equipped with antiship missiles may be lethally effective against an invasion fleet, but they are of less use in helping the Philippines defend its sovereignty against everyday encroachment or helping Japan cope with pressure from Chinese aircraft over the East China Sea. In fairness, this dilemma might well attend any U.S. defense strategy in the Western Pacific. But the more Washington emphasizes high-end conflict scenarios and anti-access forces, the sharper this trade-off will become.

No Easy Answers

There are no perfect solutions to these challenges. Every choice comes with risks and consequences. The best the United States and its allies and partners can do is mitigate those risks to the extent possible, which begins with recognizing that the requirements of assurance, deterrence, and warfighting often cut in different directions—and that Washington cannot adequately address any of these dilemmas on its own.

As discussed, the Pentagon may envision addressing the competing imperatives of assurance, deterrence, and warfighting by effectively bifurcating the force. An “inside force” located within the first island chain would reassure allies of U.S. commitment and dissuade China from thinking it can succeed with a rapid fait accompli. If war occurs, it will be supplemented by an “outside force,” located mostly beyond the immediate reach of China’s most potent A2/AD assets, which would provide the bulk of the striking power needed to turn back a PLA assault and eventually end the conflict on favorable terms. Yet that is only a partial answer to the dilemmas raised here, many of which will persist even if the United States optimizes different parts of its forces for different tasks.

One requirement for more squarely confronting trade-offs between speed and sustainability, between survivability and lethality, and so on would be closer coordination between the officials responsible—in the United States and friendly countries—for operational planning, capability development, and alliance management. After all, the hardest trade-offs tend to arise at the intersection of these tasks. But even within the U.S. government, it is not clear that the dilemmas are as sharply understood, or as explicitly acknowledged, as they could be. When the authors recently traveled to the region, we were struck that many of these dilemmas are not really being debated yet with key allies and partners.

This is a potentially costly mistake. Each trade-off has extensive implications for Indo-Pacific allies and partners; addressing them requires not just understanding but also extensive military reforms and sensitive political guidance from U.S. friends. The U.S. military no longer possesses power projection capabilities so overwhelming it can determine its strategy independently and then seek the acquiescence of like-minded nations. For the first time in decades, Washington must truly integrate its Asian friends into its most crucial strategic debates—as well as the training, exercises, contingency planning processes, and wargames that both inform and flow from those debates. The alternative is a strategy that becomes dangerously disjointed as the United States and other defenders of the Asian order confront difficult choices in divergent ways.

Given the growing worry about crises or conflict, there is little time to waste. The shorter the time horizon gets, the starker the trade-offs will become. Hard dilemmas are the price to pay for decades of lethargy in dealing with a growing Chinese challenge. If the United States, its allies, and its partners do not confront these issues head-on today, the consequences could be ugly tomorrow.

Hal Brands is Henry Kissinger Distinguished Professor of Global Affairs at the Johns Hopkins School of Advanced International Studies and senior fellow at the American Enterprise Institute.

Zack Cooper is senior fellow at the American Enterprise Institute and a lecturer in public and international affairs at Princeton University.

To read the full brief as it appears on the Center for Strategic and International Studies (CSIS), click here. 

To read the full brief, click here.

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The report recommends streamlining redundant U.S. regulatory protocols, as well as emphasizing clarity and uniformity in countries’ regulations on sanitary and phytosanitary trade issues. International trade agreements should include agricultural biotech provisions, and science-based outreach is needed to boost public understanding of safe technologies such as gene-edited crops.

Participants in the Yeutter Institute project included high-level government officials from the current and previous presidential administrations, farmers, plus academics and practitioners in plant genetics, agricultural sciences, economics and law. The Yeutter Institute is part of the University of Nebraska–Lincoln’s Institute of Agriculture and Natural Resources.

Global population is on course to reach 9.3 billion by 2050, up from the current 8.1 billion, and ag biotech innovation is crucial to increase crop yields. But, the report says, “the U.S. regulatory process threatens to hold up innovation” because the “cumbersome regulatory structure can result in duplicative reviews and is a costly burden on innovators.”

U.S. officials can help, the report recommends, by streamlining and coordinating the redundant regulatory processes for ag biotech conducted separately by the U.S. Department of Agriculture, Food and Drug Administration, and Environmental Protection Agency.

The Yeutter Institute has begun preliminary briefings with Capitol Hill staff in Washington, D.C., about the group’s findings and will share with trade professionals and other interested groups, as well.

“Convening people who bring a variety of experiences and perspectives to trade policy discussions is core to the Yeutter Institute mission, and that is what we did with this project,” said Jill O’Donnell, Haggart-Work Director of the Yeutter Institute. “It’s important for policymakers to hear from a broad spectrum of voices as they make decisions, and that includes voices representing various aspects of the agriculture industry, as well as those from the Midwest.”

The document also underscores the need to remove trade impediments to be competitive globally. China has launched an initiative to dominate agricultural seed technology and innovation, and the Chinese government has put up roadblocks to approving U.S.-developed seeds in favor of domestic seed development, the report says.

Countries can use the World Trade Organization’s international agreement on sanitary and phytosanitary issues as a baseline to set uniform, science-based standards. Such a step, the report notes, would reduce complexity and complication in global agricultural trade, especially helping developing nations as they work to expand their ag export opportunities.

“The days of (free trade agreements) are not necessarily over forever, but in agriculture, we need transparency and science-based regulatory approaches as much as we need traditional market access,” the report says. Such an approach “is especially advantageous for developing countries that face a more acute need to improve their own productivity to feed their people.”

The report explains that gene editing for crops is an extension, at an accelerated pace, of trait-focused crop breeding used for millennia. “Gene-editing techniques can be a shortcut to a breeding process that occurs naturally,” the report says. “It’s a scientific way to introduce genetic variability, which farmers have been doing for decades. In fact, plant breeding dates back thousands of years to when people first domesticated wild plants.”

In the mid-20th century, Iowa agronomist Norman Borlaug devoted hundreds of hours to the meticulous breeding of wheat varieties and won international plaudits, including a Nobel Prize, for the resulting landmark improvements in crop yields. Modern gene editing for crops uses the same basic scientific method but at a far more efficient pace, the report notes. Such innovation is vital, the report says, to boost crop yields adequate to meet the world’s growing food demand.

Outreach efforts that explain the safety and importance of these scientific techniques are needed to enable further innovation, the report notes.

To read the news release covering the report, click here.

To read the full report summarizing the roundtable discussion held by the Clayton Yeutter Institute of International Trade and Finance at the University of Nebraska-Lincoln, click here.

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Under President Biden, the United States is reinvigorating its trade policy to better confront the major challenges of the 21st century, but key questions remain.

U.S. trade policy—and with it the rules and institutions that constitute global economic architecture—has rarely been static. But over the past five years, beginning with the passage of the U.S.-Mexico-Canada-Agreement (USMCA) and continuing with the Biden administration’s innovative trade initiatives currently being negotiated with partners in Europe, Asia, and the Americas, the future of U.S. trade has never been more open-ended.

Climate, once largely absent from global trade rules and agreements, has vaulted to the forefront of U.S. trade priorities. By contrast, market access, long considered the fulcrum of trade deals, is absent from the Biden administration’s signature trade initiatives in the Asia-Pacific and is being deployed selectively in a sectoral arrangement with the European Union involving steel and aluminum. These new policy directions are occurring against several major shifts in domestic economic policy and global economic governance: 1) a pivot toward industrial policy in the United States driven by three major pieces of legislation—the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Investment and Jobs Act (IIJA); 2) a dramatic turnabout in global attitudes toward supply chain management and the balance between efficiency, resilience, and security in cross-border trade; and 3) the obsolescence of the World Trade Organization (WTO) as a forum for resolving trade disputes.

This issue brief examines some of the key trade initiatives pursued by the Biden administration to date. It then sets out key questions facing U.S. trade policy in a global environment defined by volatility and renewed ambition to tackle the great challenges of the 21st century, such as climate change, inequality, and great power competition.

Overview of key trade initiatives

Over the past two years, the Biden administration has pursued a number of innovative trade initiatives that in different ways aim to redefine the scope and purpose of U.S. trade relations. These initiatives differ both in structure from traditional free trade agreements (FTAs) and also in their substance, most notably in the emphasis they place on climate aims and worker empowerment over tariff reductions.

Variation on a multilateral theme

The United States’ decision not to join the Trans-Pacific Partnership (TPP) it negotiated—now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—highlighted the skepticism among policymakers and the American public of traditional trade agreements. This does not mean that the United States should or will step back from multilateral engagement and even direct trade negotiations that could lead to enhanced access to the U.S. market, but it has forced a reimagining of what economic engagement looks like. Four examples of this are already underway in the Biden administration:

• The Indo-Pacific Economic Framework for Prosperity (IPEF): Launched in May 2022, IPEF established a framework for negotiations among 13 nations: Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, the United States, and Vietnam. These negotiations aim to establish an updated model of economic engagement across borders. Market access is not on the table, but there are four pillars that offer broad and potentially substantial levels of investment, regulatory alignment, and coordination around industrial standards and supply chains between the United States and participating nations—depending on the specificity of the outcome and its implementation. These pillars are: 1) connected economy, or trade; 2) resilient economy, or supply chains; 3) clean economy; and 4) fair economy. IPEF members may select among the pillars and are not required to agree to all four.
  
  There are two key points to consider: First, the nations associated with IPEF have significant—though not complete—overlap with the nations that negotiated the TPP. This clearly shows that economic engagement in the Indo-Pacific remains a priority for the United States, even if the nature of that engagement has shifted.
  

  Second, and related, the different pillars of IPEF use language that closely resembles previous FTAs without incorporating market access mechanisms—such as tariff reductions—that raised valid concerns on the part of climate and worker advocates in the United States. For example, the “connected economy” pillar seeks to increase and improve trade among the 13 nations by collaborating and coordinating on core issues such as labor rights, environmental protection, transparency in rule-making and regulations, and facilitation measures such as simplifying customs procedures.

• The Americas Partnership for Economic Prosperity (APEP): Since June 2022, the U.S. State Department and U.S. trade representative (USTR) have engaged with partner countries across the Americas—Barbados, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Mexico, Panama, Peru, and Uruguay—on a similar series of negotiations aimed at producing a similar set of commitments as IPEF. The ongoing consultations have five focus areas: 1) reinvigorating regional economic institutions and mobilizing investment; 2) making more resilient supply chains; 3) updating the basic bargain; 4) creating clean energy jobs and advancing decarbonization and biodiversity; and 5) ensuring sustainable and inclusive trade.
  

  The APEP negotiations do not have as clear of a precursor as IPEF, which can partially explain the interesting collection of nations associated with this effort. Politics and existing trade relations vary among the included nations—though, on the latter, most of the nations included already have existing bilateral trade agreements or frameworks with the United States. With Ecuador, the United States has a Trade and Investment Council. With Uruguay, there is a Trade and Investment Framework Agreement. Barbados is the only nation where there is currently no agreement or framework. The rest have an existing FTA.

• The U.S.- Taiwan Initiative on 21st- Century Trade: Also in June 2022, the United States and Taiwan began consultations over ways to deepen the trade and economic relationship between the two nations. This evolved into official negotiations focused on building out the details listed within the negotiating mandate, which has similar construct and charges as IPEF and APEP—notably, a commitment to focus on core issues related to trade facilitation that could help further open economic doors, potentially in the form of an FTA.
• The U.S.-EU Trade and Technology Council (TTC): Among the Biden administration’s earliest trade-related actions, the establishment of the TTC occurred as part of a broader statement of joint work and commitments between the United States and the European Union. The TTC’s main charge is to foster cooperation in trans-Atlantic trade and investment, specifically focused on emerging technologies and infrastructure.
  

  The just-announced Clean Energy Incentives Dialogue will be a part of the TTC and focused on coordinating incentive programs. The main goals will be to avoid trans-Atlantic trade tensions and to ensure that such programs are mutually reinforcing and do not simply lead to windfall profits for companies that could play the two against each other for more and better subsidies. This type of dialogue is necessary to guard against excessive corporate welfare and keep the focus on clean energy deployment and strong domestic economies.

Trevor Sutton is a Senior Fellow at The Center for American Progress

Mike Williams is a Senior Fellow at The Center for American Progress

To read full report, click here. 

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The technology war between the US and China has taken a new turn as the two countries’ race to subsidise their industries gathers pace. The lack of an ambitious response and flexible business support measures from the EU could have serious consequences for European competitiveness and industrial development.

Summary

This paper analyses the economic and political causes and developments in the technology war between the US and China, which began in 2015 and continues to escalate. The Biden Administration has complemented export control measures with a drive to maximise the technological distance between the two competitors through largescale incentives in the form of subsidies and tax breaks. However, these introduce dangerous imbalances into the global playing field, with the potential to affect other actors such as the EU.

Analysis

The most important trade war in the last few years has not been the tariff war initiated by Trump. In contrast to what some might think, it has been the technology war between the US and China, which began at the end of the Obama era, gathered pace during the Trump presidency and has further escalated under the Biden Administration. The war has two aspects: first, to stop China catching up with US technological supremacy (with all the associated economic and military implications) by blocking technology transfer; and, secondly, to maximise the technological distance between the US and China, subsidising national production. This latter aspect has major consequences for the EU, with the potential to create a dangerous lag in technology.

Enrique Feás is a Senior Analyst at the Elcano Royal Institute.

To read the full analysis, please click here.

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THE NUMBERS: Average U.S. tariff rates,* 2022 –

Women’s underwear 15.5%

All underwear 14.7%

Men’s underwear 11.5%

Steel 5.7%

All goods 3.0%

* “Trade-weighted,” combining tariffs collected on all imports, including those under MFN tariff rates, Chinese products subject to “301” tariffs, and FTA/preference products exempted from tariffs.

WHAT THEY MEAN:

Worst Valentine’s Day surprise ever: The U.S. tariff system taxes women’s underwear more heavily than men’s. Facts follow:

1. Steel vs. Underwear: First, tariffs are fundamentally a form of taxation, and tariffs on underwear are high. A Google search this morning finds “about 144,000” uses of the phrase “steel tariffs” and “about three” (3) of the phrase “underwear tariffs.” But despite the domestic and international controversy over steel tariffs, clothing tariffs in general and underwear tariffs specifically are lots higher. In 2021, automakers, building contractors, and other metal buyers ferried 28 million tons of steel in from abroad for $44 billion, and paid the Customs Service $2.5 billion in tariffs. Thus the “average” tariff on steel came to about 5%. Buyers of clothing, meanwhile, bought 5.5 million tons of clothes for $109 billion and paid $16 billion on it, for an average of 14.5%. Underwear makes up about a tenth of clothing imports — 519,000 tons or 3.4 billion articles, at $10.1 billion last year — and brought in $1.54 billion in tariff revenue. The average underwear tariff, therefore, was 14.7%* or about three times the rate on steel.

2. Tariff Rates: Second, the U.S. tariff system taxes women’s underwear at higher rates than men’s. To dip briefly into Customs-and-trade-policy jargon, underwear tariffs are published in Chapter 61 of the Harmonized Tariff Schedule** (“Knitted or Crocheted”), headings 6107 and 6108, and in Chapter 62 (“Other than Knitted or Crocheted”) headings 6207, 6208, and 6212. Together these five sections spread out over 17 pages and include 68 separate tariff “lines,” from line “61071100,” for men’s cotton underpants and briefs, to line “62129000,” a catchall for unclassifiable and possibly exotic things. The rates in these 68 lines range from 0.9% to 23.5%, diverging mainly along lines of class and gender. Among the products with clearly comparable female and male items, (a) aristocratic silks are lightly taxed, at 2.1% for women’s panties and 0.9% for male boxers and briefs; (b) the analogous working-class polyesters are heavily taxed, at 14.9% for men and 16.0% for women; and (c) middle-class cottons are, well, in the middle, at 7.6% for women and 7.4% for men. The highest rates fall on women’s products in heading 6212 with no obvious masculine counterpart: brassieres in a range from 4.8% (silk) to 16.9% (cotton or polyester), girdles 20%, and corsets 23.5%.

3. Costs: Third, tariffs on underwear, like consumer goods tariffs generally, are eventually paid by shoppers. Since Americans buy more women’s underwear than men’s, and since it is more heavily taxed, Customs raises more money from the women’s stuff. About three quarters of the $1.54 billion in underwear tariffs last year — $1.23 billion on $7.90 billion in imports, for an average rate of 15.5% — came from women’s underwear. Men’s brought in $306 million on $2.65 billion, for an 11.5% average. Peering a bit more closely, the $1.23 billion in lingerie tariffs came from 3.28 billion separate articles — i.e., about 37 cents per piece. The $306 million on men’s products came from 1.28 billion separate articles, or about 24 cents each. Markups, domestic transport costs, sales taxes, and so forth appear to have roughly tripled the prices of clothing*** from border to cash register last year, with tariffs amplified a bit at each stage. While precise figures would vary with the price of the item, on average the tariff system appears to add about $1.10 to the cost of each women’s underwear item, and 75 cents to men’s.

4. Comparisons: In international context, the U.S.’ underwear tariff rates as an overall average are pretty typical. But the U.S. system is (a) very unusual in taxing luxuries more lightly than mass-market goods, and (b) possibly unique in taxing women’s underwear more heavily than men’s. Most tariff systems have flat rates applying to all underwear: 5% in Australia, 10% in New Zealand, 18% in Canada, 20% in Colombia, also 20% in Jamaica, 25% (with an anti-poor twist, see below) in India, 30% in Thailand, an eyebrow-raising high 45% in South Africa, and so on. The Japanese and EU tariff systems in fact have a modest pro-female tilt, as they impose lower rates — zero in the Japanese case, 6.5% in the EU — on products in the 6212 heading, such as brassieres and corsets, as against flat rates of 9% and 12% for the rest.

As to the U.S., shifting from the jargon of customs and trade to that of policy analysis and evaluation: Seriously?! Boo! Do better!

Nonetheless, we still wish readers a happy and romantic Valentine’s Day.

* Up from 12.0% in 2017. This increase to some extent reflects the “301” tariffs on Chinese-stitched brassieres, briefs, etc. imposed in 2019, but other factors are at work as well. Both China and zero-tariff Central America have also lost market share, while MFN suppliers in Bangladesh, Vietnam, Cambodia, Indonesia, and India have gained relative to both.

** Some other clothing items show up in Chapters 42 and 48 — respectively leather and rubber products — but underwear of these types have no specific tariff line, so left out of the analysis above.

*** Clothing spending by consumers was about $400 billion last year; import value at the border $110 billion; 98% of clothing is imported.

FURTHER READING:

The U.S. International Trade Commission maintains the U.S. Harmonized Tariff Schedule. Check Chapter 61, sections 6107 and 6108, and Chapter 62, sections 6207, 6208, and 6212 for underwear.

And the ITC’s Dataweb requires a bit of HTS expertise but appears unique in the world in allowing ordinary citizens to get not only tariff rates but very detailed information on U.S. exports, U.S. imports, and tariff collection, by product and country.

Background:

Is the anti-female tilt of underwear tariffs typical of the American tariff system, or a weird anomaly? Overall, the “class” bias, in which silks and cashmeres are taxed lightly while cottons are taxed heavily and polyester and acrylics most of all, is the norm for U.S. consumer goods tariffs. The “gender” bias, in which women’s underwear attracts higher tariffs than analogous men’s goods, seems less systematic though still the rule. Asked to study these questions in 2018, ITC economists concluded the following:

“… [T]ariffs act as a flat consumption tax. Since a flat consumption tax is a regressive tax on income, tariffs fall disproportionately on the poor. Across genders, we find large differences in tariff burden. Focusing on apparel products, which were responsible for about 75% of the total tariff burden on U.S. households, we find that the majority, 66%, of the tariff burden was from women’s apparel products. In 2015, the tariff burden for U.S. households on women’s apparel was $2.77 billion more than on men’s clothing. … . This gender gap has grown about 11% in real terms between 2006 and 2016. We find that two facts are responsible for this gender gap: women spend more on apparel than men and women’s apparel faces higher tariffs than men’s.”

ITC’s look at gender and class bias in the tariff system.

PPI’s Ed Gresser on U.S. consumer goods tariffs as taxation.

And Miranda Hatch in the BYU Law Review on the tariff system and gender bias.

Around the world:

The European Union tariff system has a 12% tariff on all briefs, panties, and boxers whether cotton, silk, or polyester, and whether designated “men’s and boy’s” or “women’s and girl’s,” and a lower 6.5% on brassieres and corsets.

Japan’s is 9% on comparable things and duty-free on brassieres and corsets.

Australia is at 5% all the way through.

India has an anti-poor tilt (many items get “25% or Rs25, whichever is higher,” in practice meaning >25% rates for anything costing less than $1.25 per item, so in practice cheap goods important to low-income families will be taxed more heavily than expensive luxuries), but no divergence in men’s and women’s rates.

Canada is 18% all the way through.

And Jamaica 20%.

And some trade-and-gender links:

WTO’s Informal Working Group on Trade and Gender.

… and a nine-expert panel (“Does Trade Liberalization Have Gender’s Back?”) from last December’s.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

To read the full article, please click here. 

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The U.S.-EU Trade and Technology Council (TTC) held its second ministerial meeting in Saclay – Paris, France on May 15-16, 2022. U.S. co-chairs, Secretary of State Antony J. Blinken, Secretary of Commerce Gina Raimondo, and United States Trade Representative Katherine Tai were joined by EU Co-Chairs European Commission Executive Vice Presidents Margrethe Vestager and Valdis Dombrovskis to review progress, meet with a range of U.S. and EU stakeholders, and advance Transatlantic cooperation and democratic approaches to trade, technology, and security that deliver for people on both sides of the Atlantic.

Thanks to the close and enduring ties between the United States and the European Union, we have resolved long-standing bilateral issues, including disagreements on tariffs, and leveraged the strength of our partnership to counter non-market, trade distortive practices, and respond swiftly to Putin’s war with unprecedented sanctions and export control measures. Building on these successes, the United States and European Union, home to 780 million people who share democratic values and the largest economic relationship in the world, will advance the TTC agenda on a number of critical economic and technology policies and initiatives designed to strengthen our bilateral economies, meet current geopolitical challenges and update the rules of the global economy.

TTC working groups are deepening U.S.-EU cooperation by expanding access to digital tools for small- and medium-sized enterprises and securing critical supply chains such as semiconductors. They are collaborating closely on emerging technology standards, climate and clean tech objectives data governance and technology platforms, information and communications technology services’ (ICTS) security and competitiveness, and the misuse of technology threatening security and human rights. The TTC working groups are also coordinating on export controls, investment screening and security risks, and a range of global trade challenges, including countering the harmful impact of non-market, trade-distortive policies and practices on technological development and competitiveness in sectors of shared priority. To ensure that the government dialogues are informed by the broad perspectives of the U.S. and EU communities inform their work, the TTC working groups are continuing robust engagement with a diverse range of stakeholders, including those in industry, labor organizations, think tanks, non-profit organizations, environmental constituencies, academics, and other civil society members.

During their ministerial meeting, the U.S. and EU TTC co-chairs reviewed the outcomes generated by the joint working groups and announced key outcomes.

To read the full report from the White House, please click here.

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That case is not just grounded in economics. Free trade is a critical foreign policy tool that promotes peace and cooperation, and it remains a pillar of the liberal international order. Free trade is also moral: as Adam Smith observed, humans are “an animal that bargains,” unique in our ability to prosper through commerce. Government restrictions on these natural and voluntary transactions—whether across or within national borders—enrich a privileged few at the expense of all others, especially the poor. Trade also enriches and empowers the world’s poorest and most vulnerable people, especially women and children who once lived in unspeakable conditions.

Finally, China represents real challenges, but dealing with it does not warrant abandoning free trade. Instead, historical and recent evidence demonstrate that China’s economic threat to the United States has been exaggerated, that aggressive unilateralism will prove less effective in influencing the Chinese government’s behavior than multilateral engagement, and that the United States will be better positioned to respond to a rising China if it embraces the openness and confidence that made America an economic powerhouse.

To read the full report from the CATO Institute, please click here. 

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With inflation running at 40-year high rates, President Joseph R. Biden Jr. is wringing his hands and the Federal Reserve is signaling more interest rate hikes in 2022 and 2023. But policymakers are overlooking one set of actions that could make a meaningful contribution to taming inflation: trade liberalization. The data cited in this Policy Brief indicate that a feasible package of liberalization could deliver a one-time reduction in consumer price index (CPI) inflation of around 1.3 percentage points.

That reduction would amount to $797 per US household, about half the size of pandemic relief in 2021. As a bonus, the embrace of trade liberalization would curb inflationary expectations taking hold in American firms now protected by trade barriers from foreign competition.

Goal: Liberalization Equivalent to a 2 Percentage Point Reduction in Tariffs

In a PIIE blog, Katheryn Russ explores the direct impact on US inflation of US tariffs imposed specifically on imports from China. Her research shows that these particular tariffs only marginally raised costs for US consumers and firms. But inflation can be meaningfully reduced if one looks at a broader array of tariffs.

To make a show of combating inflation, the Biden administration has rolled out an anti-monopoly strategy, arguing that lack of competition and high profits in the energy sector, among others, are contributing to high prices. But some press reports indicate that Treasury officials have argued privately that relaxing tariff duties would also ease price increases hitting American consumers.

If the White House takes these views seriously, it should set itself a liberalization target equivalent to a 2 percentage point tariff reduction. To put that goal in context, President Donald Trump inflicted Americans with $81 billion1 higher costs by imposing an additional 16 percent average tariff on $506 billion of imports from China. All told, over $610 billion of US imports in 2021 were subject to high tariffs, penalty duties, or severe quotas (table 1), and $949 billion of US imports were subject to some form of import duty. Two percentage points of tariff-equivalent relief on the $2,800 billion of US merchandise imports in 2021 would be equivalent to $56 billion2 in lower costs for Americans. If President Trump can raise costs for average households by $81 billion, President Biden can at least lower those costs by $56 billion.

piie policy brief

To read the full report from the Peterson Institute for International Economics, please click here.

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