A10| Wednesday, December 2, 2020 ** THE WALL STREET JOURNAL.
President-elect Joe Biden announces nominees and appointees for his economic-policy team on Tuesday, including his choice for
Treasury secretary, former Federal Reserve Chairwoman Janet Yellen, below.FROMT TOP: LEAH MILLIS/REUTERS; CHANDAN KHANNA/AGENCE FRANCE-PRESSE/GETTY IMAGESglobalist anymore,” said Jef-
frey Frankel, a Harvard Uni-
versity professor who worked
with former Federal Reserve
Chairwoman Janet Yellen, Mr.
Biden’s choice for Treasury
secretary, at the Council of
Economic Advisers in the Clin-
ton administration. “The word
itself is so damaged. We’re
definitely chastened.”
Mr. Biden has said he won’t
push for new trade deals until
the U.S. gets its domestic house
in order. He has also called for
the U.S. to strengthen ties with
traditional allies.
Michael Pillsbury, an out-
side adviser to Mr. Trump on
China and a scholar at the
Hudson Institute, a conserva-
tive research institution, said
he didn’t think Mr. Biden
would be soft on China but he
did suspect Mr. Biden wouldn’t
be as interested in the China-
trade issue as Mr. Trump.
Tough trade decisions loom
for Mr. Biden, Mr. Pillsbury
said, including whether to
abide by a trade truce Mr.
Trump struck with Chinese
leader Xi Jinping last year,
whether to begin working
again with the WTO to resolve
trade disputes, and whether to
restart semiannual talks with
China on economic and secu-
rity matters. On some of these
issues, such as the bilateral
talks Mr. Trump suspended,
Mr. Pillsbury said he suspected
Mr. Biden wouldn’t veer too
far from Mr. Trump’s policies.
At the center of the new
economic policy is Ms. Yellen,
who has publicly challenged
Mr. Trump’s use of tariffs.
Speaking at a Bipartisan
Policy Center event in Febru-
ary, Ms. Yellen said tariffs
hadn’t been effective, in part
because they put upward pres-
sure on the U.S. dollar. A
strong dollar reduces the cost
of imports and makes U.S. ex-ports more expensive on world
markets, hurting their compet-
itiveness. “While the tariffs
may make goods more com-
petitive, the appreciation of
the currency will offset that,”
she said. “So, I regarded that
as not the proper focus.”
She added that tariffs had
made it more costly for some
U.S. manufacturers to import
needed components, hurting
their competitiveness. She
welcomed Mr. Trump’s trade
truce with Mr. Xi, stopping an
escalation of tariffs. At the
same time, she agreed China
needed to be challenged.
“I do think the United
States has real issues in terms
of its trade relations with
China and many valid concerns
that are certainly on the table
for discussion,” she said. That
included government support
for state-owned enterprises,
its efforts to force U.S. firms
to transfer high-tech know-
how into the country and its
slow pace opening its markets.
A return to pre-Trump poli-
cies toward China is unlikely.
Some Obama veterans havesaid they didn’t push China
hard enough on security or eco-
nomic issues and have learned
their lessons. Some business
groups are urging that Mr. Bi-
den give up existing tariffs on
China only in exchange for con-
cessions in other areas.
Mr. Sheets, who worked with
Ms. Yellen at the Federal Re-
serve after the 2007-09 finan-
cial crisis, said he expected the
new administration to be reluc-
tant to remove tariffs on China
but to explore removing tariffs
in other areas that affect allies,
such as steel and aluminum.
Allies in Europe and Asia
are bound to demand the U.S.
roll back tariffs on steel and
aluminum, and Mr. Biden ar-
gued during the campaign that
such tariffs hurt the U.S. econ-
omy. But even that won’t be
easy, given support for the
tariffs by U.S. metal producers
and their unions.
After Ms. Yellen’s selection
was made official Monday, sev-
eral Republicans said her long
record of service made her a
strong candidate for the job.
But she drew criticism from
some. Sen. Josh Hawley (R.,
Mo.) told reporters her past
support of increased global
trade had been good for corpo-
rations but not for workers.
At an event Tuesday where
Mr. Biden unveiled his initial
picks in Wilmington, Del., Ms.
Yellen pledged to make the
Treasury Department “an in-
stitution that wakes up every
morning thinking about you,
your jobs, your paychecks.”
Ms. Yellen made her mark in
economics researching U.S. la-
bor markets, and at the Fed she
often pushed for low-interest-
rate policies to drive down un-
employment. She has also
spent decades building up an
international Rolodex with fi-
nance and central-bank officials
at meetings of the Interna-tional Monetary Fund, Bank for
International Settlements and
other global bodies. As a top
Fed official, Ms. Yellen inter-
acted with Chinese finance offi-
cials for years, and as former
San Francisco Fed president
she sought to develop ties with
U.S. trading partners in Asia.
During and after the
2007-09 financial crisis, fi-
nance leaders sought to coor-
dinate responses to recession.
Such coordination could come
back into play now as the U.S.
and other countries look to
emerge from the Covid-19 cri-sis, some analysts said.
Important parts of Mr. Bi-
den’s economic team are in-
complete, including the next
U.S. Trade Representative, who
will play a central role carving
out a tariff strategy, and Trea-
sury and State Department
deputies that will shape Wash-
ington’s approach with Beijing.
Other pieces of Mr. Biden’s
economic team are falling into
place. Ms. Yellen’s prospective
deputy, Adewale “Wally” Ad-
eyemo, an economic adviser
during the Obama administra-
tion, now president of the
Obama Foundation, has an in-
ternational mind-set, having
helped Mr. Obama negotiate a
trade deal with Pacific allies,
which the U.S. never joined.
The new administration’s
Council of Economic Advisers,
headed by Cecilia Rouse, a
Princeton University labor
economist, has a focus on U.S.
workers, including how they‘The challenge for
the Biden
administration is to
carveoutathirdway.’FROM PAGE ONE
more, but that the trade-offs
would be manageable.
Mr. Trump’s election four
years ago in part reflected the
toll that foreign competition
took on Americans over two
decades of amped-up globaliza-
tion, particularly in manufac-
turing communities run down
by cheap imports. One of Mr.
Trump’s “America First” mes-
sages was that Washington
elites, joining with global com-
panies, let U.S. workers down
with unbalanced trade deals.
Another was deep skepticism
of global institutions like the
World Trade Organization.
The prime example, in this
view, was China, which in the
two decades since it joined the
WTOhasgrowntobethe
world’s second-largest econ-
omy, a massive employer and
key market for many American
companies—while, in the eyes
of many officials, stealing U.S.
technology and often skirting
international rules. China dis-
putes allegations that it steals
technology or breaks rules.
President-elect Biden’s ini-
tial economic picks—most of
whom served in the Obama or
Clinton administrations—still
largely believe in the benefits
of globalization and trade, ac-
cording to interviews and their
public statements. Yet they also
have grown circumspect about
the pitfalls of globalization that
Mr. Trump highlighted.
For Mr. Biden’s new eco-
nomic team, the election rep-
resents a bid to address the
failings of globalization in a
more cooperative manner with
the rest of the world than Mr.
Trump. Mr. Biden has signaled
he wants to push allies for help
confronting China and press
for more aggressive programs
domestically to help Americans
hurt by trade, and aides have
signaled a skepticism about us-
ing tariffs as a weapon in trade
confrontations.
“There was a clear state-
ment from U.S. voters four
years ago, that the gains from
globalization and our eco-
nomic system needed to be
shared more widely,” said Na-
than Sheets, a Treasury De-
partment official under Presi-
dent Barack Obama, now chief
economist at investment-advi-
sory firm PGIM Fixed Income.
Still, he said, Mr. Biden and
his new economic team dis-
agreed with Mr. Trump’s tac-
tics, including the widespread
use of tariffs and his confronta-
tional approach with traditional
allies. “The challenge for the
Biden administration,” he said,
“is to carve out a third way.”
‘Definitely chastened’
Globalization had its up-
sides, including cheap goods
for U.S. consumers, more ex-
port markets, stronger global
growth and cost-efficient sup-
ply chains delivering profits to
U.S. multinationals and their
investors. But few economists
now dispute that trade dam-
aged many communities and
public support for global deals.
Bipartisan political support for
trade was visibly eroding in
2016 when the presidential
candidates of both parties op-
posed Washington’s entry to
the 12-nation Trans-Pacific
Partnership, which later took
effect without the U.S.
“I would not call myself a
ContinuedfromPageOne
are affected by competition
with low-cost workers abroad.
“With open trade there are
winners and losers,” Ms. Rouse
said in a 2019 interview with
Worth magazine. “The losers
are really losing, and we need
to take care of them and take
on more nuanced models of in-
ternational trade as a result.”
Mr. Frankel said there needs
to be increased focus on do-
mestic workers left behind by
trade, technology and unequal
education, with more spending
domestically on preschool, in-
frastructure and health.
Some observers see the
new administration backing
away from Mr. Trump’s ag-
gressive use of sanctions.
Mark Sobel, who worked in
the Treasury Department for
four decades under different
administrations and now is at
the Official Monetary and Fi-
nancial Institutions Forum, a
London-based think tank, said
he sees Mr. Biden reserving
sanctions for the most urgent
national-security objectives
and using them in concert
with other nations.Dollar primacy
Mr. Trump’s liberal use of
sanctions at times led other
countries to seek workarounds
that limited their use of the
dollar. Some former U.S. policy
makers have expressed concern
that overrelying on sanctions
in the long run could thus un-
dermine confidence in the dol-
lar as a reserve currency.
“The Obama administration
clearly used sanctions. They
weren’t shy about that,” said
Mr. Sobel. “But they tried to
build multilateral support for
their sanctions to a much
greater degree.”
While the new administra-
tion is likely to seek to pre-
serve the dollar’s relevance in
global trade and finance, it
might tolerate some weaken-
ing in the currency’s trade
value without saying it very
explicitly, said Mr. Sheets.
That would help U.S. exports
and even out U.S. imbalances
in global trade.
“The most interesting part
of the Yellen pick will be what
she decides to say on the dol-
lar,” said Marc Sumerlin, a se-
nior economic adviser to Presi-
dent George W. Bush, now
managing partner at economic
consulting firm Evenflow
Macro. Market participants
once hung on every Treasury
secretary’s word about the cur-
rency. They are not as sensi-
tive to these utterances as they
used to be, but investors would
take note if Ms. Yellen signaled
an interest in or tolerance for a
weaker currency, he said.
Administrations under Presi-
dents Clinton and Obama called
for a strong dollar, though they
didn’t want it to get too strong.
Mr. Bush’s administration
called for a strong dollar but
tolerated its weakening after a
sharp run-up that hurt U.S. ex-
porters in the early 2000s.
Mr. Trump took a different
course, often tweeting overt
support for a weaker dollar.
Currency could be an area
for negotiation between the
Biden administration and
China. Beijing allowed its cur-
rency, the yuan, to appreciate
between 2005 and 2014, then
allowed staggered deprecia-
tions that hurt the U.S. trade
position. The yuan has been
depreciating again since June.
If Chinese officials allow
their currency to rise, that
could take some pressure off
U.S.-China relations and set a
stage for the removal of some
tariffs, Mr. Sheets said.
—Bob Davis
contributed to this article.Biden’s
Econ Team
Seeks Reset
Wall Street bankers, and in
particular those fromGoldman
Sachs GroupInc., have long
held senior positions in the
White House. Under President-
elect Joe Biden, such roles are
going to executives ofBlack-
RockInc.
A former Goldman executive
held the Treasury secretary
post in three of the past four
administrations, but the firm is
absent so far from the incom-
ing White House this time. In-
stead, two executives who have
worked at asset-management
giant BlackRock will be the se-
nior Wall Street representa-
tives.
Mr. Biden is expected this
week to name BlackRock’s head
of sustainable investing, Brian
Deese, to run the National Eco-
nomic Council, said people fa-
miliar with the matter. Adewale
“Wally” Adeyemo, a former
chief of staff to BlackRock’s
chief executive, was named
Tuesday as the No. 2 at the
Treasury Department.
“By picking folks with deep
ties to large asset managers,
the administration can help as-
suage financial executives’ con-
cerns. It sends a clear signal to
the industry to breathe easier:
They can plan for stability
without likely facing massive
new regulatory or tax risks,”
said Tyler Gellasch, executive
director of investor trade group
Healthy Markets Association.
Some progressives and in-
vestor advocates worry that the
naming of any finance execu-
tives could result in looser reg-
ulatory scrutiny on big money
managers.
But broadly, BlackRock may
not draw the kind of anger that
traditional Wall Street bankslike Goldman tend to generate.
BlackRock is in the business of
investing money for individuals
and institutions like endow-
ments, and much of its growth
comes from funds that track
market indexes.Asset managers like Black-
Rock don’t arrange mergers
and acquisitions, they don’t
earn big profits from trading
and their employees, while well
paid, often aren’t seen within
the finance industry as swag-
gering bankers. The firm has
faced criticism for investing in
companies that contribute to
climate change, and for failing
to live up to its own rhetoric on
the subject, environmental ac-
tivists say. It pledged this year
to take a tougher stance.
The role of BlackRock
alumni in the Biden administra-
tion is the latest chapter in a
decadelong rise in both Wash-
ington and on Wall Street.
BlackRock is the largest asset
manager in the world, with $7.
trillion under management as
of September. As it has grown,
it has both boosted its opera-
tions in Washington and hired
government officials. Messrs.Deese and Adeyemo worked in
the Obama administration.
BlackRock’s global footprint
and experience with markets
“will be invaluable as the presi-
dent-elect navigates a slowing
economy and turbulent markets
in the wake of the pandemic,”
said Stefan Selig, an investment
banker who runs BridgePark
Advisors LLC and was under-
secretary of Commerce during
the Obama administration.
The Biden administration
economic team will be filled
with economists and policy
makers who focus on areas
such as income inequality and
labor markets. That is a con-
trast to the Trump administra-
tion, which named former
Goldman Sachs executive Ste-
ven Mnuchin as Treasury secre-
tary, former Goldman President
Gary Cohn as an economic ad-
viser and other firm alumni to
senior roles. Goldman veteranRobert Rubin served as Presi-
dent Bill Clinton’s Treasury sec-
retary, while Henry Paulson Jr.
occupied the position in Presi-
dent George W. Bush’s second
term. The Obama administra-
tion had few Wall Street execu-
tives.
Mr. Adeyemo, a former se-
nior international economic ad-
viser during the Obama admin-
istration, is expected to serve
as Janet Yellen’s top deputy at
the Treasury Department. The
former BlackRock executive
worked as a senior adviser for
the company from 2017 to 2019,
including as interim chief of
staff to BlackRock CEO Larry
Fink.
Mr. Deese was a key member
of the White House Task Force
overseeing the bailout of Gen-
eral Motors Corp. and Chrysler
LLC in 2009 and advised the
government in negotiating the
2015 Paris climate accord.BYDAWNLIM
ANDGREGORYZUCKERMAN
BlackRock Alums Tapped for White House
Adewale ‘Wally’ AdeyemoANDREW HARNIK/ASSOCIATED PRESSMoney Moves
AweakerdollarcouldhelpspurU.S.exports.Global trade in goodsSources: World Trade Organization (trade); Dow Jones Market Data (index)WSJ Dollar Index
11050607080901002005 ’10 ’15 ’$051015trillion1990 ’95 2000 ’05 ’10 ’