President Biden Reinvents US Trade Policy, Focusing on Domestic Workers Over Globalization

President Biden is distancing the United States from full-throttle globalization, marking a stark divergence from both Republican and Democratic trade policies of past decades.

The President is reshaping the U.S. approach to international commerce by focusing on the needs of American workers rather than consumers. This shift features aggressive measures against China and sizeable federal subsidies for preferred industries.

Traditional trade deals, which often provided American companies with better access to foreign markets at the cost of letting overseas producers sell more goods in the U.S., have been left out of Biden’s strategy. The White House argues that these agreements resulted in significant job losses for American factory workers.

In a move that surprised the business community, Biden retained the Trump-era tariffs on Chinese imports despite his criticism of them during the 2020 election campaign. He also restricted the sale of the most advanced U.S. computer chips to China, and recently implemented a partial ban on American investment in some Chinese tech start-ups due to the deteriorating relations with Beijing.

Unlike his Democratic predecessors in office, Biden’s trade policies bear more resemblance to those of his Republican predecessor, earning him cautious praise from some Trump allies. However, these policies have also irked moderate Democrats who view expanded trade as a pathway to prosperity and affordable goods.

Stephen Vaughn, who served as general counsel in the Trump administration’s U.S. Trade Representative office, believes that U.S. trade policy is experiencing a long-term shift. He sees it moving towards pragmatism, with more concern about workers, wages, and national security.

Biden’s Upcoming Trade Challenges

The next few months will test the Biden administration’s trade policy as it faces key deadlines for various initiatives, including efforts to restructure the global steel market with Europe and negotiations for an Indo-Pacific Economic Framework (IPEF). The administration will also have to decide on the future of tariffs on Chinese imports.

Biden’s approach rejects the trade liberalization doctrine that held sway for nearly three decades after the Cold War’s end. Previous presidents prioritized efficiency and low costs for consumers, but Biden emphasizes resilience against unexpected shocks such as disease, extreme weather, or geopolitical incidents, even if it entails additional costs.

Yet, it’s Biden’s spending on subsidies for domestic semiconductor manufacturing, clean energy programs, and public infrastructure that sets him apart from other presidents of the post-Cold War era. This spending is designed to signal the private sector to increase its investment in industries that the administration believes will be critical to future economic growth.

Critics and Supporters of the New Trade Approach

Pro-trade Democrats view Biden’s deviation from traditional negotiations and embrace of industrial policy as a disappointment. Former treasury secretary Lawrence Summers, who served alongside Biden in the Obama White House, warned that the president’s thinking was “increasingly dangerous” and criticized his focus on creating blue-collar jobs despite a long-term shift away from such work.

Conversely, administration officials argue that their approach responds to changing public opinion against further trade liberalization. Indeed, a recent Reuters/Ipsos survey found that 66% of respondents were more likely to back a presidential candidate in 2024 who favored additional tariffs on Chinese imports.

This shift in U.S. trade policy emerges from the Biden administration’s concerns that the previous Wall Street-friendly approach to trade had political vulnerabilities that Trump exploited to win the presidency, and it proved inadequate in counteracting China’s state-directed economic policies.