Why the world must learn to love Biden’s tariffs

I begin this note with the understanding that this very headline will upset some readers, but please bear with me until the end. As I explained in today’s column, Biden’s approach to tariffs is very different from Trump’s. This is part of a multifaceted and increasingly nuanced strategy to build a fundamentally new and fairer trading system. I think this will ultimately benefit not only the United States but the world.

We all know that the Washington Consensus is over and the World Trade Organization is not functioning, but the main reason for this is the persistent gap in global trade that has expanded since China joined the WTO in 2001. This is because they are unable to manage or judge the balance. The idea was that the Chinese government would eventually abandon non-market practices and loosen state control of the economy as the economy became richer, but that did not happen. In many ways, China has strengthened both. This culminates in current concerns about the prospect of dumping of Chinese electric vehicles in global markets and the US approach to it, namely imposing tariffs on a range of critical items including clean technology, semiconductors and other strategic inputs. has reached.

This is not just a US issue. U.S. Trade Representative Katherine Tai told me last week: . . We extended our hand to liberal democracies and market economies. The stakes are high, but ultimately it’s their choice. ”

U.S. National Economic Advisor Lael Brainard essentially reiterated these ideas in a May 16 speech, saying: China’s industrial capacity and exports in certain sectors are currently so large that they may undermine the viability of investments in the United States and other countries. ” Basically, no country on this scale can compete with state aid, artificially suppressed wages, and low environmental standards.

The problem is that Europe has so far been reluctant to accept all this, along with the reality that the WTO is broken. The neoliberal paradigm of shareholder value, market “efficiency,” and the pursuit of low prices at the expense of everything and everyone else (i.e., workers and the planet) has led to slowing growth trends, This poses an existential threat to the expansion of equality and liberal democracy.. Yes, Europe is concerned about EV dumping. However, there has been little major discussion about how to create a new paradigm. As European competition economist Christina Caffara outlines so well in her recent Promarket article, much of this is due to the stubborn technocrats in Brussels who feel threatened by the new order. At the same time, there is no need to actually address the direct effects of neoliberalism faced by politicians in individual nation-states.

She said: “The dominant culture at the EU Competition Directorate-General remains a version of neoliberal values. Economists, staff and agency leaders still implicitly operate within neoliberal orthodoxy. They are surrounded by “clients” (corporate actors and their advisors) who only speak that language. Interaction with citizens is limited, with public meetings and… . This is a listening session held by a US government agency. ” I think the same is true for DG Trade.

But the tide may be turning. French President Emmanuel Macron’s recent speech, as well as statements and reports from Italian politicians Enrico Letta and Mario Draghi, have led some Europeans to believe that we are in a new era. It shows a new willingness to confront the fact that Rules, new partnerships, and new approaches to growth.

In particular, Mr. Macron has made it clear that Europeans are fundamentally more aligned with the United States than with China., He argues that those who equate U.S. industrial policy and tariffs with China’s political and economic approaches are making a grave mistake. In his words, “we are not equidistant” from the United States and China. “We are allies of the American people.”

Similarly, European countries that equate President Trump’s tariff approach to President Biden’s are also barking up the wrong tree. Renaud Rasch, a senior fellow at the Jacques Delors Institute and a former economic attaché at the French Embassy in Washington, recently wrote an article for the French journal Le Grand Continent that argues that It very accurately depicts the clear differences between trade strategies. Mr. Trump sees the energy transition as a “transition to hell,” while Mr. Biden sees it as a “historic opportunity to reindustrialize, appease, and heal the nation.”

Indeed, Lassus noted that Biden’s second term could bring about a “convergent vision with Europe,” pledging an approach to both climate and trade that protects workers’ interests. We believe that this is important to deter far-right forces in both the United States and China. And France. I totally agree.

One thing is worth noting. Le Grand Continent is one of the only European magazines of its kind to have articles translated into English, and Jake Sullivan’s speeches etc. translated into French. Perhaps simply transcending the language barrier could lessen fixed views of the transatlantic Other. Peter, do you agree? What do you think of Macron’s speech and Europe’s reaction to Biden’s tariffs?

Recommended reading

• I read a book during my vacation in Greece Ministry of the Futureis a great piece of science fiction about climate change that reads like an introduction to the future. The good news is that it’s not all gloom and doom. Highly recommended as summer reading.

• Taiwan Digital Minister Audrey Tan’s new book, plurality”, released today, offers an optimistic vision of how technology can actually improve democracy, rather than make it worse. Her country is a perfect example, and she is a hugely noteworthy mover and shaker on the world stage. Wouldn’t it be interesting, for example, if someone like her could be her CEO of TikTok, if Frank McCourt’s “people’s bid” to buy TikTok was successful?

• Don’t miss this “Tearing Thread” weekend feature on the FT about three women who brought down a Medellin drug cartel.

Peter Spiegel answers

Lana, having worked as an EU correspondent in Brussels for six years, I would be wary of looking at France’s declaration on competition and trade policy and believing it represents the views of other European countries . As Mr. Tai rightly argues, the European Commission’s competition authority is committed to free markets, both in its merger policy and state aid approach to industry, and DG Trade’s Eurocrats are largely free traders. It is.

Remember, giving Brussels control over competition policy was in many ways a British initiative, particularly the 1989 Merger Regulations, which were incorporated by the Thatcher government into European law with Anglo-American economic views. It was considered a method. Britain was also the intellectual incubator of the Single European Act, which strengthened Brussels’ powers over trade.

The French never liked this, and Italy had long had allies. In many ways, then, Macron (and Letta and Draghi) are repeating long-standing national prejudices. Britain may be gone, but I doubt that Germany and its Nordic neighbors, the Netherlands and other Scandinavian countries, are about to sign up to more protectionist competition and trade policies.

I also want to add a note of caution about why some people in the White House may be a little upset by your headline. I think many in the Biden administration are not satisfied with their own tariffs.

To oversimplify this political season, the Biden campaign faces two economic challenges: China and inflation. The solution they chose to confront China (tariffs) will hurt them when it comes to inflation. By definition, tariffs drive up prices. So while the Biden campaign may believe that a hard-line trade policy toward China might be politically helpful in industrial battleground states, the issue has repeatedly been cited nationally as voters’ top economic concern. It may end up costing you. In the latest FT/Michigan Ross poll, voters cite cents as one of their biggest financial headaches.