President Biden and former President Trump did not agree on much during the campaign. Unfortunately, one of the few areas where Biden has chosen to continue Trump administration policies largely unchanged has been in trade. Most recently, Biden has chosen to allow tariffs on China to remain in place, making tariffs and trade barriers as much a Biden administration policy as a Trump administration one.
That’s disappointing given the public statements Biden and Vice PresidentKamala Harris made during the campaign, which rightly criticized those same tariffs for harming consumers, farmers, and manufacturers. At the same time, though, Biden’s course reversal shouldn’t be too surprising.
After all, even as Biden criticized Trump’s tariffs, he championed proposals for Trump-style so-called “Buy American” rules that would favor domestically-made products over imported ones. Biden ended upacting on that idea, imposing rules that arbitrarily restrict federal government purchases of goods to businesses above a certain threshold of American labor. That may be politically popular, but in practice it will raise costs for taxpayers, restrict access to needed supplies for which domestic manufacturing is insufficient, and make products more expensive for consumers.
Biden also spent the campaign proposing to use the tax code to advance a “Buy American” agenda. Seeking to undo progress made in the Tax Cuts and Jobs Act towards bringing the U.S. tax code’s treatment of multinational businesses more in line with the rest of the developed world, Biden proposed to revert to the previous system of worldwide taxation andcharge a 10 percent offshoring surtax.
Those tax proposals are still up in the air with the reconciliation bill, but it’s clear that the Democratic Party is far from the days of then-President Obama trying to pass the Trans-Pacific Partnership. It’s clear now that Biden’s “opposition” to Trump’s tariffs was in fact a reflexive opposition to a political opponent’s policies, not a principled defense of markets because the harm to consumers and adjacent businesses from tariffs outweigh the benefit to the small domestic industries being “protected” from competition.
But as Biden doubles down on a failed tariff agenda that costs the average American household $555 a year, his wholesale embrace of import taxes represents an opportunity for Republicans to return to their roots as defenders of free enterprise. Protectionism is fundamentally incompatible with conservative appeals to the importance of competition, limited government, and low taxes.
Tariff proponents may claim that granting exclusion to some businesses can help preserve the best elements of trade. However, they are relief from tariffs that are available only to a small group of well-connected businesses, allowing the government to pick winners and losers to an even greater degree than it already is doing by imposing tariffs in the first place. A study by the Government Accountability Office found that the United States Trade Representative denies about 87 percent of tariff exclusion requests, suggesting that very few companies get the relief exclusions theoretically offer.
A genuine free-market approach that opposes endless taxation and deficit spending must include opposition to trade taxes as well. American consumers deserve better than being expected to pay the hidden costs of protecting favored industries.
