All of the immense benefits from free trade would be at risk if the United States chose to elevate short-term political considerations, reported Foreign Policy on Monday.
Enacting increasingly stringent Buy America provisions, undermining the rules-based global trading system, and engaging in below-zero-sum state aid arms races jeopardize all of these gains, said the report. “Other countries will not simply accept higher barriers to their products in the U.S. market without responding in kind. The result will be welfare losses and reduced productivity growth for all concerned.”
The Joe Biden administration is playing catch-up with a framework aimed at supply chain cooperation with Asian allies, but there is little momentum behind it because it does not improve access to the U.S. market for companies based in the partner countries, it said.
Noting that there are substantial costs for American consumers as they must purchase products made with domestic content requirements, which necessarily means higher-efficiency options are pushed aside and competition is reduced, it said that “with inflation running at levels not experienced since the 1980s, U.S. policymakers should prioritize giving consumers access to lower-priced options.”
Stressing that it is “political considerations” that has caused the current turn, it said that “more specifically, Democrats, who were shocked and traumatized by Hillary Clinton’s loss in 2016, have internalized the lesson they believe that campaign taught, which is never to let Republicans outflank them on protecting domestic industries with trade restrictions, especially in the manufacturing sector.”
