“I’m really tired of being called a protectionist” Catherine isPresident Joe Biden’s trade representative and a leading architect of his confrontational economic approach to China, told me Monday.
I sympathize with what Biden’s opponents have been saying lately. Former President Donald Trump told Republican lawmakers that he would An “all duties” policy, so that all federal taxes would be replaced with taxes on imports. In the near term, Trump did A 10 percent tariff is committed On all imports from any country. On the side of proposals like that — which would explode consumer prices and make the tax code even more regressive — Biden and so on sound like free-traders.
But compared to the bipartisan consensus that existed before Trump took office, I think “protectionist” is justified. So, and Biden has continued many of Trump’s tariffs from his tenure, Against the rebuke of the World Trade Organization (WTO).. Saw one this spring New Biden Tariff Storm Targets ChinaMost notably hitting electric vehicles and batteries.
And so the administration sees itself charting a new course, reversing the anti-labor trade policies of the past. “We moved the workers to the side,” said Tai to my colleague and Today, explained host Noel King, “And we need a domestic and international economic policy that champions the interests of our people.”
But was the previous era really so bad? And are the policies of the Biden administration helping matters?
Global trade has helped capture the poor
From the perspective of humanity as a whole, the period of hyper-globalization that began in the 1990s was something of a miracle. Growth rates have increased significantly in poorer countries, and economists have found that they are slowly “converging” toward richer countries. This era has seen Dramatic reduction in extreme povertyEspecially but not only in China.
For manufacturing workers in rich countries, however, the consequences were dire. US regions and industries face competition from Chinese imports Decrease in employment, Low lifetime incomeAnd if Higher drug overdose.
at the same time, Researchersincluding Those have identified some of the biggest costs of the “China shock”. found that the United States as a whole benefited from trade with China, albeit modestly. Chinese imports have lowered the price of goods, which has increased the standard of living, especially for the poor How much more they have to spend on consumer goods As a share of their income compared to solvency.
We can preserve both the world’s and the United States’ gains from globalization while addressing its real costs by combining open trade with more support for displaced workers in the process, e.g. Successful Trade Adjustment Assistance Program.
however, Critics have long debated The redistribution offered to those who lost is very limited in practice.
This has fueled a desire for a more confrontational attitude toward exporters like China, culminating in tariffs enacted by Trump and largely continued by Biden.
Trump’s tariffs haven’t worked
In his interview with Vox, the ambassador therefore claimed that consumers don’t necessarily pay for the higher tariffs. “When we started looking back at prices in the United States over the last five and six years, you didn’t see automatic price increases as a result of the tariffs,” he told King. After all, companies that import goods can simply choose not to pass on the cost of tariffs to their customers.
Except, in reality, they always are to do Pass the cost along. at least four different high quality Study Trump has seen tariffs. All found “full” or “nearly full” passthrough: that is, the tariffs were wholly or nearly wholly paid by US consumers in the form of higher prices. Make no mistake: US customers pay for the duties we charge.
Meanwhile, Trump’s tariffs have not succeeded in creating US jobs. However, they destroyed jobs in agriculture by prompting China to retaliate with its own tariffs, particularly on soybeans and cotton. It’s not clear to me whether Biden’s tariff plan would be more successful in saving or adding jobs in sectors like batteries and auto manufacturing.
Although they were an economic disaster, the researchers found the tariff a political success. Regions protected by Trump’s tariffs were more likely to vote for him in 2020.
While Tae certainly believes in tariffs against China on the merits, you don’t have to be a total cynical to think about the extent to which political factors are driving the Biden administration’s tariff policy as well.
Trade and the World System
So Trump’s policy continued Blocking appointments to the Appellate Board of the WTOAnd spent much of our interview criticizing the World Trade Organization for insufficiently fighting back against China’s own protectionist policies.
He and his team have been talk a lot about International Trade Organization, an organization created 80 years ago by President Franklin D. Roosevelt was never created. They see it as a more pro-worker, pro-environment and anti-monopoly vision of what international cooperation in trade could look like. FDR, so he told me, understood the power of “market-based economies coming together to resist the challenges of fascism on the right and communism on the left.”
As a scholar of economic history, I found the discussion about FDR’s trade philosophy interesting, but I did not expect to be discussing it with a member of the White House Cabinet in 2024. Because we don’t have ITO US Congress It was blocked in 1950. if you see Certificate of IncorporationWhich, of course, includes a lot of tough antitrust and labor rights language, “much of which the US Congress would never sign up to,” Inu standardsaid a trade policy expert at the Council on Foreign Relations.
So must be thinking of China when he invokes the dream of an organization uniting a “market-based economy” against fascism and communism. But at the same time he is protecting Tariffs on steel and aluminum Which applies not only to China, but to almost all countries.
The Biden administration Buy American Provisions Allies like South Korea have also been hurt, and so has Biden Opposing a Japanese company’s attempt to buy US steel. Is it really just about China, or a more general (hate that word here again) protectionist turn?
I hope I’m wrong. So revealed Strong support for US trade preferences toward Africa, which gives me some hope that the new paradigm he represents will treat poor countries fairly. But so far, the new trading system mostly reminds me of how much we’ve gained from the old one — and how much we stand to lose by abandoning it.
