In this discussion, James Politi, the Washington bureau chief at the Financial Times, delves into the rising trend of protectionism in U.S. trade policy. He highlights how both Democrats and Republicans are reshaping their approaches, often citing national security as a key concern. The conversation unpacks the Biden administration's potential block on Japan's Nippon Steel takeover and examines the political motivations behind these shifts. It raises intriguing questions about the future of trade relations, especially with European allies amid evolving economic dynamics.
The bipartisan shift toward protectionism in U.S. trade policy is driven largely by national security concerns and economic nationalism.
Recent protective measures like the Inflation Reduction Act reflect a strategic electoral focus that prioritizes domestic jobs over international trade relationships.
Deep dives
Rise of Protectionism
The trend toward protectionism in the U.S. is largely attributed to national security concerns that have gained prominence since Donald Trump's presidency and intensified following the COVID-19 pandemic. Global supply chain disruptions revealed vulnerabilities in key industries, particularly medical supplies, which exacerbated anxieties about dependence on Chinese manufacturing. This heightened awareness of national security has shifted political attitudes, with both major parties increasingly adopting protectionist stances, demonstrating a more systematic approach under the Biden administration, contrary to expectations of a post-Trump shift. Such trends reveal a growing bipartisan consensus focused on safeguarding U.S. industries and self-sufficiency.
Political Implications of Trade Policies
The protectionist policies now embraced by both Democratic and Republican candidates serve strategic electoral purposes, targeting voters who prioritize domestic jobs and national pride. While Trump's campaign proposes radical measures, including steep tariffs on imports, Democrats also adopt streamlined versions of these policies, suggesting a shared political landscape focused on protecting American manufacturing. The shift reflects a broader disenchantment with globalization and seeks to appeal to a voter base that increasingly values economic nationalism. As both parties navigate trade strategies, their focus may inadvertently distort the reality of America's diverse economic landscape.
International Repercussions and Trade Relations
The evolving U.S. protectionist stance is causing apprehension among American allies in Europe, who hoped for a less contentious trade environment following the Trump administration. Despite initial signs of compromise, policies like the Inflation Reduction Act and the CHIPS Act have created friction by prioritizing U.S. investments over European interests. Concerns surrounding a hawkish approach toward China complicate relationships, especially for countries with significant trade ties to China. As the 2024 election approaches, European officials anticipate continued challenges regardless of the outcome, although a Harris presidency might yield a less confrontational approach than Trump's proposed tariffs.
Democrats and Republicans have taken a protectionist turn on trade policy over the past few years. They say it’s to protect national security, but that argument doesn’t always hold up. Just look at this week’s announcement from vice-president Kamala Harris that she doesn’t support the purchase of US Steel by Japan’s Nippon Steel. The FT’s economics editor, Sam Fleming, and Washington bureau chief, James Politi, join this week’s Swamp Notes to explain why both parties are leaning into “Made in America”.
Register for our live subscriber webinar now at ft.com/uswebinar
Swamp Notes is produced by Ethan Plotkin, Sonja Hutson, Lauren Fedor and Marc Filippino. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. Special thanks to Pierre Nicholson.
