Katherine Tai Interview: U.S. Trade Representative on Biden’s rationale for tariffs

“I’m really tired of being called a protectionist,” Catherine DaiPresident Biden’s trade representative and one of the main architects of Biden’s confrontational economic policy toward China told me on Monday.

I sympathize with Biden’s opponent in light of recent comments. Former President Donald Trump reportedly told Republican lawmakers that he hopes “Full Tariff” Policyin which all federal taxes would be replaced by import taxes. In the short term, Trump Promise to impose 10% tariff Imposing tariffs on all imports from any country. By comparison, such a proposal — which would cause consumer prices to skyrocket and make the tax code more regressive — makes Biden and Tai sound like free traders.

But compared to the bipartisan consensus that prevailed before Trump took office, I think “protectionism” is fair. Tai and Biden continued many of the tariffs from Trump’s term, Ignoring the WTO’s condemnationThis spring Biden imposes a slew of new tariffs on Chinathe most obvious blow is electric vehicles and batteries.

Tai and the government believe they are charting a new path, reversing past anti-worker trade policies. “We pushed the workers aside,” Tai told my colleagues. Explain today “We need a domestic and international economic policy that safeguards the interests of our people,” host Noel King said.

But were the previous times really that bad? And will the Biden administration’s policies help?

From the perspective of humanity as a whole, the period of hyperglobalization that began in 1990 can be described as a miracle. Growth rates in poor countries have clearly acceleratedEconomists have found that they are gradually “converging” towards rich countries. Extreme poverty has been significantly reducedespecially but not exclusively in China.

For manufacturing workers in rich countries, however, the consequences are dire. Employment rate declines, Lower lifetime earningsor even Higher rates of drug overdose.

at the same time, Researchersinclude Those who point to the biggest costs of the “China shock” finds that the United States as a whole has benefited from trade with China, albeit modestly. Chinese imports have lowered the cost of goods, which has improved living standards for the poor, especially given that How much more they have to spend on consumer goods The proportion of income is higher than that of the wealthy.

We can combine open trade with more aid for workers who have lost their jobs in the process of globalization to preserve the benefits that globalization has brought to the world and to the United States, while addressing its real costs, such as by Successful Trade Adjustment Assistance Program.

However, Critics have long argued that In practice, redistribution to those who suffer is too limited.

That fueled a desire for a more confrontational approach toward exporters like China, culminating in Trump’s tariffs, which Biden has largely continued.

In an interview with Vox, Ambassador Dai argued that consumers would not necessarily end up paying for higher tariffs. “When we look at prices in the United States over the last five or six years, you don’t see an automatic increase in prices as a result of tariffs,” she told King. After all, companies that import goods can choose not to pass on the cost of tariffs to their customers.

But in reality, they always Do Pass on the costs. At least Four different high quality study We have already looked at Trump’s tariffs. All have found that they are “fully” or “almost fully” passed on: that is, they are paid entirely or almost entirely by American consumers in the form of higher prices. Make no mistake: American consumers pay for the tariffs we impose.

at the same time, Trump’s tariffs fail to create jobs in the U.S.They did, however, destroy jobs in the agricultural sector by prompting China to retaliate with tariffs of its own, particularly on soybeans and cotton. It’s not clear to me that Biden’s tariff regime would be more successful in preserving or increasing jobs in areas such as battery and auto manufacturing.

The researchers found that while the tariffs did little economically, they were a political success. Regions protected by Trump’s tariffs were more likely to vote for him in 2020.

While Dai does believe in the legitimacy of imposing tariffs on China, you don’t have to be completely skeptical to imagine the extent to which political factors are driving the Biden administration’s tariff policy.

Tai also continued Trump’s policies Obstructing the appointment of WTO Appellate Panel membersAnd he spent much of the interview criticizing global trade organizations for failing to adequately combat China’s own protectionist policies.

She and her team have been Said a lot related International Trade OrganizationThis is an institution that was proposed 80 years ago by President Franklin Roosevelt but never came into being. They see it as a vision of international trade cooperation that is more pro-worker, pro-environmental, and anti-monopoly. President Roosevelt understood the power of “market economies united against the challenges of right-wing fascism and left-wing communism,” Tai told me.

As an economic history buff, I found the discussion about Roosevelt’s trade philosophy very interesting, but I didn’t expect to have such a discussion with members of the White House Cabinet in 2024. We don’t have an ITO because U.S. Congress It was blocked in 1950. If you look at Organization CharterDay is right that the deal contains a lot of tough antitrust and labor rights language, “much of which is not something the U.S. Congress would sign off on.” Dog ManakTrade policy experts at the Council on Foreign Relations said.

When Diana spoke of her dream of an organization that would unite “market economies” against fascism and communism, she was certainly thinking of China. But at the same time, she was defending Steel and aluminum tariffs This applies to almost all countries, not just China.

Biden Administration Buy American Food It also hurt allies such as South Korea, and Biden Oppose a Japanese company’s acquisition of U.S. SteelIs this really just about China, or is there a more general (again, Dai Bingguo hates that word) turn toward protectionism?

I hope I’m wrong. Tai said Strong support for U.S. trade preferences for AfricaThat makes me optimistic that the new model she represents will treat poor countries fairly. But so far, the new way of trading has mainly reminded me of how much we gained from the old way — and how much we might lose if we abandon it.