Democratic challenger Joe Biden has a double-digit lead over incumbent Donald Trump in national polls.
With less than three weeks to go until the presidential election, one expert is thinking ahead to what a possible Biden presidency could mean for U.S. trade and the dollar.
Nathan Sheets, chief economist at PGIM Fixed Income and former Treasury undersecretary for international affairs during the Obama administration, envisions a return to traditional trade diplomacy under Biden.
"A Biden administration is going to be very focused on trying to rehabilitate and strengthen our relationships with our allies across the world. And I think part of that will be normalizing trading relationships in a number of different ways, and I think you'll see more kind of diplomatic pressure and a lot less tariffs from President Biden than what we've seen over the last four years," Sheets told CNBC's "Trading Nation" on Thursday.
In a separate call with CNBC, Sheets added that Biden could focus on reform of the World Trade Organization and lead a coordinated effort to address China's trade practices. While Trump has used tariffs as a cudgel, Sheets said Biden would be better suited to build international consensus around addressing any unfair trade with China. Trump has heralded his trade war with China as a success.
Sheets said a Biden administration's approach to the U.S. dollar is more uncertain.
"There's really mixed feelings about the dollar. On the one hand, a stronger dollar is a signal of market confidence in the United States and that's attractive. … On the other hand, a stronger dollar also means a headwind for trade. So I think that you'll hear a little bit more nuance in the discussion," Sheets said.
The Trump administration's views on the greenback have been conflicted. In 2018, for example, Trump said he wanted to see a strong dollar and forecast that it would rise. Treasury Secretary Steven Mnuchin, meanwhile, championed a weaker U.S. currency.
Finally, Sheets expects a Biden administration to back stimulus as one of its top priorities.
"If Joe Biden is elected, job one will be a big-time fiscal stimulus package. The HEROES Act that was passed by the House was $3.5 trillion and I think that will be the starting point for the discussion. So I think a Biden win means big stimulus in the first quarter," he said.
However, Sheets also sees the possibility of stimulus in the case Trump is reelected. He expects cooler heads after the election to be able to come to an agreement on the top-line amount. Trump has supported a $1.8 trillion deal, while House Speaker Nancy Pelosi has pushed for a higher $2.2 trillion package.