President Joe Biden got into office trying to forge a trade middle ground between Donald Trump’s fiscal conservatism and the free-wheeling globalization that came before him.
That program, however, was on life support by the beginning of 2022.
Build Back Bust
When Congress rejected Biden’s Build Back Better initiative and its generous tax breaks for domestic companies late last year, his commitment to revive American manufacturing looked doomed.
Secret White House squabbles over tariffs and capital controls pulled down his pledges for a better, harder China policy.
Allies throughout the world, eager to protect their business interests in the second-largest economy, were hesitant to accept Biden’s demands to band together against Beijing.
After that, Russia attacked Ukraine. China refused to condemn it, thus validating Biden’s prediction that the 21st century will be defined by a conflict between freedom and autocracy.
Congress is now hurrying to establish tax breaks for American-made microchips, weighing new investment limits for Chinese corporations, and maybe pushing for broader industrial benefits in the near future.
Biden’s planned Asian economic pact is gaining traction, with crucial partner South Korea joining in and European allies toughening up on Beijing.
However, the White House economics team has agreed to penalize China’s economy if and when Beijing assists Russia in Ukraine.
Joe Bidens failure in leadership has caused the first steps of reconstruction of the Iron curtain. pic.twitter.com/igGPhLnfVy
— Tom Norton For Congress (MI-02) (@ForNorton) February 24, 2022
The surge of activity in Washington confirms a shift in Washington’s conventional thought that began before Russia’s war, but was hastened by Vladimir Putin’s actions.
The tone was captured in Biden’s State of the Union address.
Aside from his statements of support for Ukraine, the administration’s commitment to revive local manufacturing and reduce America’s dependence on China, Russia and other antagonistic regimes received the most praise.
That goal is a significant break from American trade strategy during the last four decades when both parties established programs that encouraged American companies to relocate production overseas.
Globalization, it was hoped, would result in lower pricing for Americans and political change in nations such as China and Russia. Both narratives have been challenged by the invasion, as well as the supply chain disruptions caused by the COVID-19 outbreak.
The China Issue
During a recent press presentation with Secretary of Commerce Gina Raimondo, H.R. McMaster, Trump’s then-director of national intelligence, said, “China is Russia’s primary enabler in this heinous war.”
Kayleigh McEnany never left Trump
But Psaki is leaving Biden
What does that tell everyone she knows Biden is a failure and doesn't want to be associated with the Biden administration anymore and Bidens scandals pic.twitter.com/DRgFGSFnmF
— 🇺🇸Jed Eckert🇺🇸Wolverines (@David0662) April 2, 2022
However, it is unclear if Biden and the Democrats will be able to capitalize on the momentum to change US trade policy.
While his economic team is unanimous on China’s role in Ukraine, they are divided on how to deal with the Trump administration’s tariffs on China and how much to restrict American companies doing business there.
They must yet flesh out the terms of the proposed Indo-Pacific treaty, which is still more of an idea than a concrete economic agreement.
If Senate leaders don’t find a way to appease moderate Sen. Joe Manchin, whose resistance destroyed the Build Back Better bill last year, they’ll have to find methods to use the president’s unilateral authority to stimulate domestic production.