Trump’s toxic trade policies are well and alive. They are being furthered by Biden’s policies today, especially those now pushing industrial promotion in the name of national security and “economic patriotism.” The role of the Department of Commerce and CFIUS have become much more important during the Biden administration.
Recent U.S legislation expands support for semiconductors, restricts U.S. sales of chips to China, and further tightens both outward U.S. investment and inward investment into the U.S.
Yes, the dynamics of globalization have changed over the last twenty years and the geopolitical landscape has dramatically evolved. We do need a rebalancing of domestic / national security needs, especially those emerging since the global Covid pandemic, with the dynamic growth factors of global commerce. This includes assessing more carefully the inflationary impact of the U.S. dollar valuation on its exports.
However, many of the recent U.S. trade and investment policy responses have not been thought through sufficiently.
Some U.S. policies today echo those of the 1930’s and are disturbing. There is a sentiment today in the United States that is somewhat similar to the fearful and protectionist ones held by many in the 1980’s toward ‘Japan Inc. ‘ This is clearly an unfortunate throwback.
Countries are already talking about protesting these protectionist policies by the Biden administration as being in violation of WTO trade rules and subject to WTO litigation. We’ll see.
Here are a few recent articles discussing the above.
“Investors are learning to Love Industry Again.” Financial Times (Oct. 3, 2022).
“U.S. Said to Plan New Limits on Tech Sent to Chinese.” Wall Street Journal (Oct. 4, 2022).
“Recent Legislation Expands Role of Government in Private Markets.” Wall Street Journal (August 13, 2022).
“GOP Needs to Leave Trump Behind on Trade.” Wall Street Journal (Oct. 3, 2022).
“Raimondo Drives Industrial Policy.” Wall Street Journal (Sept. 6, 2022).
“Post-Neoliberal Era Brings New Business Rules.” Financial Times (October 10, 2022).