2023-12-21 06:00:58 ET
The push toward protectionist trade policies is continuing in the U.S., just under different branding in different administrations. "America First" and "Make America Great Again" have been replaced with "de-risking," "diversifying" and "level the playing field," but the results are often the same and built on platforms that seek to counter national security concerns, the loss of manufacturing jobs, or risks associated with the supply chain. Billions of dollars in subsidies have even been doled out to the various American sectors to encourage domestic production, tariffs and quotas remain in place on many imports, and economic sanctions are increasingly being used as a tool to stabilize markets rather than deterrence.
Snapshot: There's a myriad of reasons why things have gone that way, but one of the most important factors is that foreign adversaries have been using the structure to weaponize the system. In recent years, the U.S. has passed mega-spending bills like the Inflation Reduction Act, which poured billions of dollars into domestic energy production, after watching Vladimir Putin turn off the taps to the EU. The CHIPS and Science Act also offered generous tax credits and subsidies to shore up the domestic semiconductor industry, while export controls have been put in place, as Xi Jinping seeks advanced chip technology to promote a new world order .
The list continues to expand with the U.S. imposing fresh sanctions on shippers and traders that have been helping the Kremlin get around a fixed price cap on sea-borne crude and refined oil products. The move is meant to reduce reliance on Russian energy and Deputy Treasury Secretary Wally Adeyemo noted that the measures would "advance the goals of supporting stable energy markets." Fresh reports have also suggested that the Biden administration is considering raising tariffs on some Chinese goods, including electric vehicles and solar products, to protect its own green industry and limit reliance on Beijing in the clean energy supply chain.
What to watch: The world is years into a new era of trade practices, which once centered on liberalized and free-market policies to promote globalization and even democracy. There are other risks associated with the new outlook, like dependency on resources that have not yet been fully reshored or an uptick in inflationary forces from protectionist measures. These kinds of leanings have also caused strains with traditional American allies, like disenchantment surrounding subsidies for EVs manufactured in the U.S., or domestic content requirements central to the energy transition.
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More on protectionism
- White House plans to restrict some U.S. investments in China
- Sunak looks to set new Brexit tone with Windsor Framework
- China challenges U.S. chip export controls at the WTO
- New export controls could cut off Huawei from U.S. suppliers
- G7 selects fixed price cap for Russian oil: Will it work?
For further details see:
U.S. weighs raising tariffs on Chinese EVs, tightens Russian oil price cap