[박현영의 워싱턴 살롱]Biden looks like’by American’ Trump

Early September last year, two months before the US presidential election. Democratic presidential candidate Joe Biden visited the headquarters of the First District of the American Automobile Union (UAW) outside Detroit, Michigan.

Standing at the podium in an outdoor parking lot with Ford and General Motors (GM) cars in the background, he shouted to the union members: “Let’s make it in Michigan. Let’s make it in America. Let’s invest in our communities and workers.”

At the Michigan campaign that day, Biden unveiled a plan to’Buy American’ to revitalize the US manufacturing industry. “The future is in’Made in America’ by all American workers,” he assured. “The auto industry will be the beneficiaries of my plan.”

It also said that it would impose a 10% tax to penalize companies that relocate jobs abroad, and a 10% tax credit to compensate companies that invest to create jobs in the United States.

On the 25th of last month, four months later. Biden, who became president, signed a’by American’ executive order. The main point is that the federal government mandates the choice of U.S.-made goods and services when building infrastructure or buying equipment.

Existing “by American” regulations were supplemented to further restrict exceptions, and a high-ranking position was created in the White House to directly oversee the operation of the system. First, the federal government was forced to spend 600 billion dollars (about 661 trillion won) to purchase goods, materials and services produced in the United States.

President Biden’s pledge is that “the tax paid by Americans should be used to purchase American-made goods in the United States using parts made by American workers. It is reminiscent of the slogans of’America First’ and’Make America Great Again (MAGA)’ advocated by former President Donald Trump.

That’s why Biden’s “by-American” policy comes to a metaphor of “the wolf of protectionism wearing the wrong sheep’s mask”. (David Dodwell Trade Policy Expert) It is pointed out that the extent to which he announced his intention to consult with the alliance was different from that of former President Trump.

The Biden administration is also following Trump in other trade policies. President Biden imposed tariffs on aluminum produced in the United Arab Emirates (UAE) on the 1st. President Trump withdrew tariffs on the last day of his term, and President Biden quickly restored it.

The New York Times (NYT) analyzed that “this is one of the first important steps Biden has taken on trade, which shows the tendency of the Trump administration to maintain the heavy tariffs imposed on foreign metals to protect the domestic industry.” .

In fact, President Biden has not mentioned so far as to whether to maintain or abolish the 10-25% high tariffs imposed on Chinese goods worth $550 billion (about 618 trillion won) by former President Trump during the trade war.

The same goes for the steel and aluminum tariffs that the Trump administration began imposing on several countries in March 2018. Biden’s staffs have only stated their principled position that “the government will conduct a comprehensive review of the economic effects of tariffs before making any decisions.”

There are already concerns that Biden’s “by American” policy will not solve the problems facing the US economy as a result. The Financial Times (FT) warned in an editorial that “the Bi-American plan is a mis-targeted policy,” and “not only will not help American workers, but will waste scarce financial resources.”

The history of “by American” policy in the United States is 88 years old. In 1933, a bill was passed that required the federal government to purchase American products first. Former President Trump signed ten executive orders to drive foreign companies out of the federal procurement market, The Economist said. As a result, 95% of the iron and steel products purchased by the federal government should be made in the US, and 55% of the other products should be made in the US. Finding parts that meet these requirements can be difficult, and prices can increase. This means spending more money on products of similar quality.

The decline in US corporate competitiveness is also inevitable. When companies are alienated from the global supply chain, their efficiency decreases, and when productivity declines in the long run, there are limits to creating jobs.

Also, if the US excludes foreign companies from the public procurement market, US companies may face headwinds abroad. The European Union (EU) has announced that it will retaliate by preventing US companies from entering the EU procurement market if the US creates trade barriers.

Also, it is not that the United States can create a trade barrier. As a member of the World Trade Organization (WTO), the United States is limited in favoring its own companies and discriminating against foreign companies. According to the WTO Government Procurement Agreement (GPA), contracts worth more than $182,000 (about 244 million won) must be opened to foreign companies.

Nevertheless, why does the Biden administration stick to the’Trump-like’ policy? The domestic political reason is the biggest. The Democratic Party lost its traditional support, the working class, to Trump in the 2016 presidential election. The government passed over the Rust Belt, which is known as a declining industrial zone such as Michigan and Pennsylvania. For this reason, the Democratic Party’s biggest challenge was to regain support for manufacturing workers in last year’s presidential election. Now, it has become the task of the Biden government to show convincing policy results within the remaining 21 months of the 2022 midterm election.

Washington = Correspondent Park Hyun-young [email protected]