Biden’s trade policy was formulated with political rewards in mind
The adjective that Joe Biden’s administration always attaches to its trade policy is one of those political labels, and its undisputed mediocrity is its strength. The term “worker-centered” is like the “hard-working family” long cited in American and British politics: you can’t oppose pro-worker trade policies, just like you can’t favor the incompetent lonely.
But helping all workers equally is not what it means in practice. Nearly 10 months after the government came to power, this worker-centered policy is disturbingly concerned with the old-style protectionism centered on manufacturing—not even all manufacturing, but only the part that pays off politically.
Although the Biden administration has also proposed to provide trade-distorting support to new industries such as electric vehicles, the Biden administration has continued the historic American obsession with steel. It inherits the tariffs imposed by the Trump administration on steel and aluminum, and continues to defend transparent and false reasons for promoting national security.
In October, in order to prevent the EU from imposing retaliatory tariffs, the United States converted the tariffs to Terribly complicated Quota system, but still controls imports, including imports from other countries. It is also accompanied by a new idea: a carbon club, ostensibly to prevent environmentally friendly steel from the United States, the European Union, and like-minded countries from being weakened by high-emission steel from China and other countries.In fact, it has huge potential, depending on how it is designed, becoming Transfer Traditional protectionism.
Now, for consumer goods, you can almost prove that tariffs transfer money from rich households who buy imported products to poor family workers who compete with them. However, given the complexity of modern supply chains and the efficiency loss caused by clumsy interventions, this is likely to go wrong. Attempting to redistribute income through trade policy is like cutting toenails with garden shears. The result may be shorter nails, but you are more likely to lose toes.
For industries like steel, this is completely meaningless.On the one hand, the condition of steel workers is much better than that of middle-level employees, just as recently Joint column U.S. Trade Representative Catherine Tay and Secretary of Commerce Gina Raimundo pointed out.
Second, steel is an upstream product, and a large amount of downstream manufacturing and construction—including Biden’s infrastructure plans—relies on steel.have 80 jobs In the downstream industry, everyone in the steel industry uses steel. Beware of anyone who claims to be fueling American manufacturing in general and uses steel prices as an example: they are arguing with themselves.
There is irrefutable evidence that steel protectionism is hitting other manufacturers and the construction industry.One Brilliant paper Harvard University scholar Lydia Cox analyzed the steel tariffs imposed by President George W. Bush in 2002. At a very lucky political moment, these tariffs were imposed eight months before the midterm elections. The Republican Party gained control of both houses of Congress in the midterm elections. They were relieved after a successful challenge in the World Trade Organization in 2003.
Cox found that even short-term tariffs can have lasting negative effects. The upstream steel tariff was raised by 1 percentage point, resulting in a relative decrease of 0.2 percentage point in the global market share of steel-intensive products in the downstream industry.
Over the years, the steel industry has not been abandoned by the government.For decades, efforts to impose import tariffs to prevent so-called dumping and subsidized steel from entering the United States have led to the Steel price It is usually 50-100% higher than the rest of the world.have rare Chinese steel circulating in the United States.
Biden’s policy for the steel industry is not “worker-centric” because it supports stressed employees against pampered consumers. It centers on a small number of relatively wealthy workers whose interests are contrary to those of workers in other sectors, but their union happens to be an important part of the foundation of the Democratic Party.
If this is what the government believes is necessary to maintain control of the White House in 2024 and at the same time help its allies in Congress, so be it. After all, Bush’s steel tariffs seemed to have worked at the time. But let’s be clear: The jobs that this worker-centered policy aims to save are the jobs of Biden and Capitol Hill Democrats.