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Steven Rattner: Biden’s Get-Tough-on-China Tariffs May Backfire

The tide of globalization is receding, at least from American shores. Two successive presidents have come down firmly on the side of tariffs rather than trade agreements as the preferred mechanism for managing international commerce.

History shows that we should proceed with caution. While there are political and security reasons for tariffs, America’s new protectionist stance will raise prices, limit consumer choices and risk our future growth.

The past aggressive and widespread imposition of levies of this sort has made clear that restraining trade brings with it serious risks to economic prosperity, both for the United States and other affected countries.

Last week, after laying low on this front for most of his term, President Biden announced a raft of new tariffs on selected Chinese imports including electric cars and solar panels as well as steel and aluminum. While the tariffs cover only $18 billion of imports, they are by design meant to keep Chinese products, like electric vehicles, from entering the U.S. market. In doing so, he has in large measure aligned his trade policy with that of his predecessor, Donald Trump.

It’s not hard to understand the reasons for this. While the U.S. economy continues to grow (albeit a bit slowly) and create jobs (at a fast pace), Americans are dissatisfied; polls show that a majority of voters say the state of the economy is “poor.”

In a search for culprits, eyes often turn to the growing number of inexpensive imports, particularly from China. No doubt decades of increased trade have caused some losers. Entire domestic manufacturing industries — from furniture to electronics to toys to bicycles — have essentially disappeared. And now our ability to compete in new sectors, like electric vehicles and solar panels, is in grave doubt.

Mr. Rattner is a contributing Opinion writer. He served as counselor to the Treasury secretary in the Obama administration.

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Posted: May 21, 2024 Tuesday 05:04 AM