Kamala Harris likely to shake up US trade policy

I was sitting at Washington’s Dulles Airport on Sunday night when the news flashed across the screen: Joe Biden had dropped out of the US presidential race, less than a week after former president Donald Trump survived an assassination attempt. Quite a time to be living in Washington.

Both the US electorate and donors have taken Kamala Harris’ ascension positively. She raised more than $80m in her first 24 hours, and a Reuters/Ipsos poll found she is leading Trump 44% to 42%. A poll done by NPR/PBS/Marist found that Harris and Trump are tied with 42% of polled voters. 

Even so, the path to the White House won’t be easy for Harris. She will have to run a turbocharged campaign given that the election is about 100 days away. But since the Democrats’ chances of hanging on to the White House have drastically improved compared with two weeks ago, it seems apposite to consider Harris’ trade policy and its broader implications.

Trump’s and Biden’s approaches to trade have been on show this year. On May 14 the White House announced increased tariffs on Chinese imports in strategic sectors such as steel and aluminium, semiconductors, electric vehicles (EVs), batteries, critical minerals, solar cells and medical products. In a classic moment after Biden had quadrupled tariffs on Chinese EVs, Trump responded: “I will put a 200% tax on every car that comes in from those plants.” 

There are two key dimensions of Harris’ trade policy that are worth noting. We may see a de-escalation of anti-China trade policies. Harris has diverged with Biden on tariffs, arguing that she’s not a “protectionist democrat”. This position is aligned with her broader economic and social policies. For her, tariffs are less about punitive measures targeting an adversarial nation, and more about the increased costs they pass on to US households. 

Rational approach

For example, while Biden/Trump’s approach of increasing tariffs on all base metal inputs coming from China is viewed as a way to make Chinese automotive manufacturing less competitive, Harris would have a more rational approach: the US is barely importing EVs from China to start with, so the hike in metals tariffs just makes cars manufactured by Ford or General Motors more expensive for American consumers. 

She is likely to take a stronger stance than Biden — and an exponentially stronger stance than Trump — on incorporating responsible environmental, social and governance (ESG) standards into trade. In 2016 Harris was against the Obama administration’s Trans-Pacific Partnership on environmental and social grounds. And in 2020 she was one of 10 senators who voted against Trump’s US-Canada-Mexico Agreement on grounds that it didn’t do enough to protect Americans’ jobs and the environment. 

When you consider both of these factors there are many permutations of trade policy that could emerge from a Harris administration. In the world of mining there are a few options. Minerals tariffs that result in higher costs for American end users in the energy and technology sectors could be rolled back.

This would benefit the American and the Chinese economies and reduce tension. In 2023, when discussing US-China relations Harris noted that “we, as the US, in our policy, it is not about decoupling, it is about derisking”.

Trump, on the other hand, would throw the weight of his administration into decoupling to the greatest extent possible. 

Mineral trade agreements could become more difficult to pass. Mining is undoubtedly one of the most complex when it comes to negative environmental and social externalities. Many resource-rich countries have limited standards and even more limited enforceability capacity. Jurisdictions with significant reserves but weak standards — such as Brazil and Indonesia — would be on the back foot with a Harris administration.  

There have been few times in history when US presidential candidates have had such divergent policy platforms.