CPA’s Jeff Ferry: An Economist’s Wish List On The Trump/Biden Debate

What should Trump and Biden say about the key economic issues of our time on Thursday?

President Biden will square off with his arch-rival Donald Trump on Thursday night in the first presidential debate of the season. It won’t be like any other. No interruptions by candidates (supposedly), and no audience. CNN is hosting and moderating the debate.

While most of the debate will not be centered on economic issues, there is something to be said about Biden’s continuation of Trump’s signature economic policy – tariffs – and restrictions on Wall Street investment in China defense contractors, for example. There have been stark differences between the two on matters of global commerce. It would almost be better if the two merged.

Trump restricted imports with tariffs but had no industrial strategy to go along with it.  Biden had a limited industrial strategy, using tax credits for manufacturers of semiconductors, solar and EVs, to name a few. But it did not come with any restrictions.

“To rebuild our economy, you need to rebuild manufacturing production and to do that you need a combination of import restrictions and incentives for domestic industry,” said Jeff Ferry, CPA’s chief economist. “Trump relied too much on import restriction and Biden relied too much on incentives and not enough restrictions. The trade deficit grew in both of their terms and whoever wins in November, I hope they address this issue as President.”

What should Trump and Biden say about the key economic issues of our time on Thursday?

For Biden...

“He should highlight how the CHIPS Act and IRA led to a massive increase in construction and investment in manufacturing. These two laws have the potential to create hundreds of thousands of manufacturing jobs. Those are the crowning achievements economically of the Biden administration,” Ferry said.

On China, there was a narrative that he would be weak on China because of his son Hunter’s business relationship with top Chinese business leaders. The same was said about Trump and Russia.  But “we can say Biden has done a good job on China because he continued the Trump tariffs and the decoupling process,” Ferry said. 

If he is countered by Trump on China, Biden should remind the former president that he continued much of the same policies. 

One misstep, however, was with solar. Biden’s two-year tariff moratorium on solar panels and solar cells from Southeast Asia lead to companies here soaking up product before tariffs kicked in again. Chinese multinationals happily flooded the market. He is unlikely to be challenged on that by Trump. It’s too niche of a story line for general interest voters. But if he did get challenged on it, “He can remind Trump that the moratorium is over and shipments are now in decline, and there is a new anti-dumping and countervailing duties case against these Chinese companies in Southeast Asia so the pieces are in place to restrict imports. He should take an aggressive stance on that, considering climate change policies are of utmost importance to him along with domestic manufacturing,” Ferry said.


What about Mexico?

The natural questions for a general audience on Mexico will be about fentanyl and immigration controls. Ferry wishes Biden would address the fact that we have a huge low wage nation on our border that has a free trade agreement with the U.S. “If I was a Biden supporting United Auto Workers Union guy who just won a big wage settlement, I’d want some sort of support from Biden to make it so my company doesn’t move my job south of the border.”

For Trump...

The striking thing about Trump is that he doesn’t like economists very much. He made a huge change in the economic policies of the United States by breaking with 25 years of free trade orthodoxy and rejecting the Transpacific Partnership (TPP). Biden won’t dare bring it up.

“The rejection of TPP marked a turning point in the U.S.; it also told the Democrats they could not win if they mentioned that. Trump should take credit for that shift and for addressing that large voting base that is against free trade globalism,” Ferry said. “The experts will say he doesn’t understand economic theory and probably when he was at Wharton Business School, he was out dancing at Studio 54 in New York instead of studying. But if that is the case, it was a smart move by him because it shows he has independent thought. You have to give someone credit for that these days.”

Trump is likely to discuss his economic policy ideas; one in which states that a broad 10% tariff across all goods coming into the United States might alleviate part of the federal income tax.  Trump’s ideas have come under fire, as expected, with some leading economists like Joseph Stiglitz saying Trump’s economic plan is inflationary.

“Trump can easily reply that the greatest period of inflation came in 2021-2022 under Biden. While in my opinion, both Trump and Biden ran budget deficits way too large, Trump can argue that Republicans are better at holding budget deficits in check. Frankly, I wish Biden had been better at restraining the budget deficit and some of his spendthrift advisors back in 2021 and had he done so, his poll numbers would be better today,” Ferry said.

Trump should talk the end goals of his trade policy. 

“He should say he’s going to raise tariffs and here is the purpose for that; the goal is to increase manufacturing employment, increase manufacturing capacity, and lower the trade deficit. He needs to say what is going to be his guiding star economically with that policy, and tell naysayers that we can modify those policies and tariffs in order to reach those goals,” Ferry said. 

Trump’s tariffs helped manufacturing tremendously, but employment has been flat because we still have a loss of jobs to Mexico, Ferry said.  John Deere recently announced relocating some manufacturing out of the Midwest and into Mexico. But Mexico is not politically contentious beyond the fentanyl and immigration debate. “I think Trump can and should make Mexico more contentious,” Ferry said.

“I would love him to say that we have to ask whether free trade with Mexico is a good idea or not. We went into NAFTA thinking it would enrich Mexico, but all the political change in Mexico over the last 30 years has mainly raised the the power of the drug cartels,” Ferry said. “This year saw the greatest number of Mexican candidates running for office that were assassinated before election day. We have to question this relationship and he is the perfect one to do it,  but I honestly do not expect that at all because he will praise USMCA, as it was done on his watch, and Biden will praise it because the Democrats got stronger labor and environmental rules enshrined in the deal.”

When asked about China, both Trump and Biden should say that China’s trade surplus is an insult to the world and a huge disruptor to our economy.

“When it comes to China, I’d like to hear them tell us what they are going to do about it in the near- and long-term,” said Ferry. “Trump’s proposed 60% tariff on China imports will increase decoupling but it will divert production to other countries in Asia and in Mexico and your trade deficit will remain on the upswing. So a high tariff on China alone is not a solution. If China is going to be the country they talk about most, they need to tell us how they plan on addressing China economically and not just from the national security and foreign policy angles preferred by Washington. We need an economic policy to deal with these trade cheats and large, industrial, low wage nations more broadly. If neither can correct that, we will continue with trillion-dollar deficits and a near total reliance on foreigners for manufactured goods, including critical goods like medicines and for Biden – anything related to an EV or solar panel.”

Nevertheless, voters are not won over by arguments about the economy very much. The economy is complicated. There are a lot of moving parts involved. It is easier to make emotional arguments and attack the opposition to make for exciting television, said Ferry, which is more or less what he suspects will be on display on Thursday.


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