Trump, Biden and Domestic Economic Policy – The New York Times

In July, former Vice President Joseph R. Biden Jr. presented an economic strategy to “rebuild domestic manufacturing capacity,” restoring local supply chains from semiconductors to pharmaceuticals. In September he added a tax penalty to the plan, aimed at companies that move jobs to other countries, alongside a tax credit for businesses that bring them home.

The proposals might have seemed like something from President Trump’s playbook.

“There is a common concern, which the Trump candidacy forced a lot of people to think harder about,” said Jared Bernstein, a former top economic adviser to Mr. Biden who is informally advising his presidential campaign. And that is “the extent to which globalization has left significant swaths of people in many different communities behind.”

These common understandings could reshape the global economy. No matter who wins in November, economic policy for the next several years will aim to protect American employment from outsourcing driven by employers seeking lower labor costs, and to reclaim a foothold in industries that the United States had given up for lost.

“If the argument is that we need high-paying manufacturing jobs, because they fit the skill set of a lot of people that are being left out, that is an argument for deglobalization,” said Derek Scissors, an economist at the American Enterprise Institute, a conservative think tank in Washington. “We would have to have some deglobalization for this to work.”

Depending on how the next administration deploys the tools of government to serve this cause, the United States could reconfigure the global network of corporate supply chains that multinational corporations have established over the last four decades. A “flat world” with countries ever more closely tied together through trade and investment, pursued by presidents from Ronald Reagan to Barack Obama, seems to be an outdated goal.

A Biden administration is unlikely to continue to impose tariffs on friends and foes alike, deploying protectionist tools in a more strategic and disciplined way. Still, policy proposals suggest that Mr. Biden would stick to the goal of encouraging, steering, cajoling or pushing American companies to develop critical industries and the jobs they support in the United States.

“Biden is not blindly pro-trade, but he doesn’t want to shrink from the world like President Trump has,” said Ben Harris, a senior economic adviser to Mr. Biden and his campaign. “What the vice president proposes is a new approach to globalization, one in which we don’t get behind every trade deal on the grounds that more trade is always better.”

Mr. Trump has put tariffs on imports from rivals and allies, started a trade war with China and blocked the access of Chinese companies to American technology. He renegotiated the North American Free Trade Agreement, short-circuited the World Trade Organization’s dispute settlement system and pulled the United States out of the Trans-Pacific Partnership.

But a membership survey published in September by the American Chamber of Commerce in Shanghai found that despite the administration’s push for American companies to redirect investment to the United States, only 4 percent planned to do so; 79 percent reported no change in plans.

Moreover, the trade war has come at a cost. Tariffs imposed by the United States and retaliatory measures taken by aggrieved trading partners have shaved billions off the U.S. economy, according to a Federal Reserve paper. And a 2019 study by economists at the Fed, Princeton University and Columbia University showed that tariffs imposed additional burdens on American households, raising the cost of imports and curtailing exporters’ access to markets.

For all that cost, there has been no improvement in Mr. Trump’s preferred indicator of economic dominance, the nation’s trade balance. The balance between America’s exports and imports of goods and services sank in July to its deepest deficit since the administration of George W. Bush. The balance in the trade of goods alone recorded its deepest deficit at least since the administration of Mr. Bush’s father.

Over the summer, Robert Lighthizer, the top U.S. trade negotiator, published an essay extolling the administration’s pugnacious approach as a strategy that “at long last, prizes the dignity of work.” And yet Moody’s Analytics estimated last year that the trade war with China had cost 300,000 U.S. jobs.

When the administration put tariffs on steel and aluminum from Canada, the United Steelworkers union complained that “the regular chaos surrounding our flawed trade policies is undermining the ability to project a reasoned course and ensure that we can improve domestic production and employment.”

And Harley-Davidson moved production of motorcycles for the European market from the United States to Thailand, to avoid getting caught up in the administration’s trade skirmishes with Europe.

Under Mr. Biden, “I would expect a more judicious and targeted form of protectionism,” said Kimberly Clausing, an economist at Reed College who has offered advice on tax policy to the Biden campaign. “Tax reform is useful to reduce the tilt of the playing field.” Ms. Clausing supports Mr. Biden’s proposed minimum tax on corporate profits, saying it would counter incentives introduced in the tax reform of 2017 for businesses to outsource production.