Throughout his presidency, Donald Trump played the part of a pugilistic nationalist, one who vowed to always place U.S. interests above diplomatic niceties. In Trump’s account, his “globalist” predecessors had prioritized free trade with China and warm relations with allies above safeguarding America’s industrial base, and he would end “the era of economic surrender.” Trump maintained that America boasted sufficient economic strength to dictate terms of trade to its allies and adversaries alike. It could “bring back our jobs from China, from Mexico, from Japan.” It just needed to replace an incumbent leadership class that “worships globalism over Americanism.”
Joe Biden has cultivated a much different persona. During the 2020 campaign, Biden assailed Trump’s “chest-thumping” foreign policies and promised to restore American “global leadership” and a multilateral approach to geopolitics. Once in the White House, he vowed to “repair our alliances and engage with the world once again.”
And yet, in many respects, the president’s actual governing record resembles a more coherent and comprehensive version of the one Trump had promised.
Biden’s predecessor did impose an array of tariffs on various foreign imports, some of which the current president has maintained. But these measures did little to boost U.S. industry. A 2019 analysis from the Federal Reserve found that Trump’s tariffs had actually reduced manufacturing employment in the United States by driving up the costs of inputs for U.S. producers. Meanwhile, Trump did not do much to increase America’s market share in emerging global industries through legislation.
In fact, the former president’s signature legislative achievement — his 2017 tax cuts — actually gave U.S. firms new incentives for shifting manufacturing abroad. Under Trump’s tax law, U.S. corporations pay an income-tax rate of only 10.5 percent on overseas earnings, or half the rate that they must pay on profits generated from domestic production. “It’s sort of an America-last tax policy,” Reed College economist Kimberly Clausing told the New York Times in 2018. “We are basically saying that if you earn in the U.S., you pay X, and if you earn abroad, you pay X divided by two.”
By contrast, Biden’s major pieces of economic legislation, the CHIPS Act and Inflation Reduction Act (IRA), both strongly encourage U.S. production of high-value global products: semiconductors and electric vehicles, respectively. And both laws have already spurred heightened investment in U.S. manufacturing. Following the CHIPS Act’s passage, major semiconductor makers announced that they were moving ahead with plans for new chip factories in the United States, which had previously been stalled for want of funding.
The IRA, meanwhile, offers large subsidies to electric-vehicle makers who manufacture their cars in North America. And the law also requires a large percentage of the components used to construct electric vehicles, including batteries and critical minerals, to be produced on this continent.
In anticipation of these subsidies, several carmakers and battery manufacturers have increased investment in the U.S. Ironically, as City Journal notes, Biden’s subsidies have specifically brought new manufacturing jobs to the very “forgotten” red-state heartlands that Trump promised to revitalize.
And the president has pushed this “Buy American” agenda over the objections of U.S. allies, who fear that Biden’s policies have placed them at a competitive disadvantage. In recent days, France and Germany have denounced America’s nationalistic electric-vehicle subsidies. The European Parliament’s point person for transatlantic relations told Politico on Friday, “The U.S. is following a domestic agenda, which is regrettably protectionist and discriminates against U.S. allies.” The conflict threatens to “overshadow” December’s summit between U.S. and E.U. officials.
Meanwhile, Canada fears that America’s green industrial policy will come at the expense of its own. America’s $370 billion investment in green industry dwarfs Canada’s own investments in low-carbon industry. Officials in Ottawa told Bloomberg that their country simply “can’t afford to go dollar-for-dollar with the U.S.” in subsidizing nascent green firms and technologies. What’s more, the fact that America’s approach to green industrial policy does not include carbon taxes — while Canada’s does — undermines the latter nation’s heavy industry. Meg Gingrich of Canada’s United Steelworkers Union recently testified to a parliamentary committee that “the IRA’s incentives to firms to invest in clean technology, absent of any carbon tax, provides a double advantage to U.S. steel producers.”
During the 2020 campaign, Biden criticized Trump’s approach to policing China’s unfair trade practices on the grounds that the latter’s antagonization of U.S. allies had prevented the democratic world from maintaining a united front in the face of Chinese malfeasance. But now, Biden has united America’s allies in the conviction that America is becoming nearly as unfair a competitor as China.
“We’ve tipped into a new globalization,” French finance minister Bruno Le Maire recently said. “China tipped into this globalization a long time ago with massive state aid exclusively reserved for Chinese products. Right before our eyes, the U.S. has tipped into this new globalization to develop its industrial capacity on U.S. soil.”
Meanwhile, like Trump, Biden has waged a trade war against China unilaterally and in defiance of many U.S. allies’ wishes. Unlike Trump, however, Biden has not merely imposed tariffs on some Chinese goods or export controls against select Chinese companies. Rather, the Biden administration has sought to choke off the Chinese economy’s access to all advanced semiconductors, thereby thwarting China’s development goals. If the White House’s policy succeeds, China will struggle to become a dominant player in robotics, medical imaging, self-driving vehicles, and myriad other industries.
The administration has justified these policies in decidedly nationalistic terms. In a September speech, White House national security adviser Jake Sullivan declared that America’s “comparative advantage” in the global economy “must be renewed, revitalized, and stewarded.” In the realm of key emerging technologies, Sullivan argued that the United States could not settle for a “relative” advantage over its competitors, but “must maintain as large of a lead as possible.”
To be sure, Biden has been more of a “globalist” than Trump in some respects. His administration has been somewhat more supportive of immigration (though less so than one might have expected). And he has united America’s Western allies behind Ukraine’s war efforts. Although, even in the realm of foreign policy, Biden has made good on some of Trump’s unfulfilled “America first” promises; after all, it was Biden who actually withdrew U.S. troops from Afghanistan over the furious objections of the foreign-policy Establishment.
But in the realm of economic governance, Biden has been a far more ambitious and aggressive nationalist than Trump ever was.
Whether this is a good thing remains to be seen. The president’s agenda provides many causes for celebration, but also some for concern. Biden’s industrial policies may abet decarbonization by forcing other nations to subsidize green technologies if they wish to compete in high-value sectors of the global economy. From another angle, however, this same phenomenon may resemble a “race to the bottom,” in which Western nations are forced into a bidding war for green capital’s favor, offering electric-vehicle manufacturers increasingly generous subsidies and tax breaks. Biden’s economic war against China, meanwhile, may ultimately heighten the risk of marital conflict between the world’s two great powers.
For better or worse, though, Biden’s economic agenda has translated Trump’s inchoate ramblings about deglobalization into coherent policy. We are all “Americanists” now.