Biden’s Kinder, Gentler Trumpism
(Bloomberg Opinion) -- Far from overthrowing Trumpism, President Joe Biden seems intent on continuing it — perfecting it, even. The latest evidence is his administration’s supply chain initiative, which aims to reduce U.S. reliance on China and could result in tariffs.
Since the beginning of the 2020 campaign, the rhetorical gulf between the 45th and 46th presidents has obscured their relative agreement over objectives and even methods. The administration’s 250-page report on the supply chain, released last week, represents a broader and more comprehensive vision for industrial policy than anything Trump did or could have produced.
The result of a 100-day review, the report — titled “Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth” — almost seems designed to repel attention. It identifies key products such as semiconductors, electric-vehicle batteries, minerals and pharmaceuticals and says the U.S. must secure the supply chains necessary for their manufacture. In other words, make sure they don’t go through China.
True to form, the language is far from that of the previous administration. “We must press for a host of measures,” the report states, “that help shape globalization to ensure it works for Americans as workers and as families, not merely as consumers.” The administration “must focus on building trade and investment partnerships with nations who share our values,” it says.
To back that up, the report outlines dozens of concrete steps, including $75 billion for semiconductor manufacturing, invoking the Defense Production Act to facilitate the on-shoring of nearly 100 critical pharmaceuticals and requiring that all products developed with Department of Energy funding be manufactured in the U.S.
Leaving aside questions of effectiveness, however, it’s worth focusing on the overall trajectory of politics and policy.
Trump represented a sharp turn from the neoliberal consensus that dominated the executive branch from Ronald Reagan (or even Jimmy Carter) to Barack Obama. This neoliberal ideal was characterized by a belief in free markets, free trade, greater immigration and a worldwide financial system managed by global institutions and backed by American hegemony.
Trump sensed early on that the neoliberal paradigm’s time had passed. The U.S. government would intervene in markets, foreign and domestic, on behalf of U.S. workers and stay out of conflicts that served no clear domestic interest. Like Carter, Trump viewed his party’s establishment as out of touch with this new reality, but — again, like Carter — it was impossible for him to fully break with it.
Biden campaigned as the anti-Trump but is governing as a pragmatic and statesmanlike Trump (if such a thing is possible). While Trump threatened to end all foreign wars, for example, going so far as to openly offend the military, Biden has actually issued orders to bring U.S. troops home from Afghanistan by September. And Trump ruffled feathers by sitting down one-on-one with Russian President Vladimir Putin in 2018 just after blasting American allies at that summer’s Group of Seven and NATO summits. Biden has embarked on a European tour on which he is meeting with the G-7, NATO and Putin over the span of eight days.
No issue was more fundamental to Trump’s break with the past than his view of China as a rival rather than a partner. Not only were there the constant rhetorical attacks, but there was an often overlooked admission in a 2019 speech that he had always intended to spend the economic dividends from his tax cut on a trade war with China, but that it was worth the price.
Biden has been more restrained. But his advisers have made it clear there will be no return to the Obama-era paradigm of engagement, some of which those same advisers had worked to foster.
Crucially, the Biden administration has coupled this objective with the goal of broadly shared prosperity and declining inequality. This is the keystone that Trump, with his base in the Republican Party, simply could not set in place.
Ideologically, Trump’s policies of tax cuts for multinational corporations and “Buy American” provisions weren’t very compatible. With his supply-chain initiative, however, Biden is taking a crucial step forward in defining an economic paradigm that puts neoliberalism in the rear-view mirror. Whether the shift is wise is doubtful. But there can be little doubt that it is upon us.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Karl W. Smith is a Bloomberg Opinion columnist. He was formerly vice president for federal policy at the Tax Foundation and assistant professor of economics at the University of North Carolina. He is also co-founder of the economics blog Modeled Behavior.
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