President Joe Biden has embraced much of former President Donald Trump’s trade policy. The tariffs hitting many allies as well as foes on aluminum and steel appear unlikely to go away soon
, and the broad Trump tariffs on many Chinese goods appear entrenched.
Biden has replaced America First with an emphasis on the impacts of trade policy on ordinary Americans as workers
— as opposed to just as consumers benefiting from lower prices. A move with broad potential to place politics and protectionism above efficiency and growth in evaluating deals.
Biden has elevated industrial policy even above the level afforded by President Barack Obama. He recognizes semiconductors
as ground zero in economic and strategic competition with China and is seeking a Western alliance
to secure that industry.
What Biden gets right
China cannot break into or steal this supply chain to achieve its goals of self-sufficiency and dominance without importing products whose designs may be pirated, foreign investors who willingly transfer expertise — or who fall victim to coercion — and overseas acquisitions.
A Western trade alliance that would curb exports to China of critical technologies — including consumer sectors such as cellphone assembly and electric vehicles — is critical. As is developing secure Western alternatives for labor-intensive processes, such as dividing semiconductor wafers and equipping those pieces with electrical connectors, where the Chinese global market share has doubled since 2015 to 40%.
Obama courted our Asian allies by negotiating the Trans-Pacific Partnership
, then Trump foolishly jilted them by withdrawing. The pivot of American forces to the Pacific that Obama promised has not sufficiently happened, and Washington has not mounted a credible response to China’s militarization of islands in neutral waters of the South Pacific or to its Belt and Road initiative.
We can’t simply require the Europeans not to export critical technologies to China but must make quite clear that U.S. cooperation on broader defense issues will critically depend on how they respond to our requests on trade issues regarding China.
Likewise, Biden’s ambivalence about the TPP and executive order that the federal government only purchase EVs incorporating 50% U.S. components
smacks of beggar-thy-neighbor protectionism. Biden’s diplomacy and supply chain reviews
should aim to secure supplies, not steal jobs from friends — moving chip production from China to Vietnam would be almost as good as to Arizona
Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist. He tweets @pmorici1.
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