In championing a different model, the Biden team has struggled to address the concerns of trading partners who fear private investment will now flow away from their economies to the United States as companies around the world chase the enormous new subsidies on offer.
These countries, not surprisingly, mostly liked the trade regime originally pushed by Washington-according to a poll conducted by IPSOS, more than 80 percent of people surveyed in major developing economies say trade expansion has been beneficial. Developing countries saw their share of global manufacturing rise sharply over the past three decades as China, Mexico, Vietnam, Poland, and other countries became vital to global supply chains. Countries could compete for investment not only by offering a better workforce or more efficient infrastructure, but also by holding down wages, cutting taxes, and weakening regulations. The Reagan model of cutting tariffs and reducing regulatory obstacles had the virtue of letting the chips fall where they may. infrastructure, subsidize domestic production of semiconductors, incentivize new manufacturing jobs in left-behind communities, and turbo-charge the United States’ transition to cleaner energy sources.īut the administration has struggled to figure out how the rest of the world fits in. Congress to pass legislation to rebuild U.S. Biden can rightly claim historic accomplishments in bringing government back into the economy, working with a divided U.S. President Ronald Reagan declared government to be the problem, slashed taxes, and launched the most comprehensive free trade negotiations in U.S. economic policy since the 1980s, when then-U.S. President Joe Biden’s first term, he is well along in carrying out the most dramatic revolution in U.S. In particular, by rejecting the model of trade negotiations that the United States championed for decades, the administration risks adopting an approach that excludes much of the world.
The Biden administration is in danger of doing just that with its ambitious new industrial policy. The danger of a major policy change is that, in correcting for past errors, governments commit the opposite ones.
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