President Biden is signaling that the United States’ departure from full-scale globalization during the Trump administration was not an anomaly. He is breaking with decades of trade policy to prioritize the needs of American workers over consumers, blending a tough stance on China with federal subsidies for favored industries.
Traditional trade deals, which allowed American companies greater access to foreign markets, have been left out of Biden’s strategy. The White House argues that these deals cost many American factory workers their jobs. This approach has annoyed business groups who see expanded trade as a means to prosperity and lower prices.
Despite criticizing Trump’s tariffs on Chinese imports during his campaign, Biden has retained them and taken further actions against China, including prohibiting the sale of advanced U.S. computer chips and imposing partial bans on American investment in Chinese technology start-ups.
Biden’s trade policies resemble those of his Republican predecessor more than previous Democratic presidents. While his approach has drawn support from some Trump allies, it has irked moderate Democrats who view increased trade as a pathway to economic growth.
Key deadlines in the coming months will shape Biden’s trade policy, including efforts with Europe to reform the global steel market, negotiations for an Indo-Pacific Economic Framework (IPEF), and decisions on tariffs on U.S. imports from China.
Biden’s approach marks a departure from the trade liberalization doctrine that prevailed after the end of the Cold War, as he emphasizes the resilience of supply chains and prepares for unexpected shocks. His administration is also notable for its substantial spending on subsidies for domestic semiconductor manufacturing, clean energy programs, and public infrastructure. This has been the most controversial aspect of Biden’s approach.
Biden’s legislative achievements, including the Inflation Reduction Act, the CHIPS Act, and the bipartisan infrastructure bill, will inject trillions of dollars into the U.S. economy while addressing market failures and signaling the private sector to invest in critical industries for future economic growth.
The administration claims there is a manufacturing boom that is reversing decades of offshoring, with record-high spending on the construction of new manufacturing facilities. However, manufacturing employment has been steadily declining due to automation. Manufacturing currently accounts for just 8.3 percent of total employment, down from 8.6 percent at the beginning of Biden’s term.
The Biden administration aims to discourage job offshoring and increase worker confidence by utilizing a “rapid response” provision in the U.S.-Mexico-Canada Agreement to address wage depression and denial of collective bargaining rights. Some pro-trade Democrats who viewed the Trump era as an anomaly are disappointed by Biden’s rejection of traditional negotiations and his embrace of industrial policy.
Instead of pursuing traditional trade deals, the administration is pursuing less ambitious agreements with allies in the Indo-Pacific region and Latin America. These “framework” deals aim to coordinate supply chains and set business standards without providing greater access to the U.S. market.
Administration officials defend their approach, attributing it to public opinion shifts against further liberalization and the negative impacts of previous trade deals on inequality and U.S. manufacturing jobs. They argue that a new approach is necessary to address the challenges posed by China’s economic policies and supply chain disruptions during the pandemic.
Biden’s approach represents both a change in the world and a change in perception within the Democratic Party, signaling a clear departure from the legacy of Clinton and Obama. While retaining some of Trump’s policies, Biden places greater emphasis on working with allies to address China’s practices and subsidies for clean energy.
Overall, President Biden’s trade policy marks a departure from the previous approach, with a focus on American workers, tougher measures against China, and substantial spending on subsidies for key industries.
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