Biden Makes His First Protectionist Trade Policy Error Already

Mish

After railing against Trump for years on his counterproductive tariffs, the spotlight is now on Biden.

Biden Reinstates Aluminum Tariffs 

In one of his first trade moves Biden Reinstates Aluminum Tariffs

President Biden reinstated tariffs on aluminum exported from the United Arab Emirates on Monday evening, reversing President Donald J. Trump’s decision to lift them on his last day in office.

The decision is one of Mr. Biden’s first significant moves on trade and suggests that his administration may be inclined to maintain the type of hefty tariffs Mr. Trump imposed on foreign metals to protect domestic industry. That position found favor with unions, but disappointed industries and businesses that have argued the tariffs raise costs.

In March 2018, Mr. Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from a variety of countries, including the United Arab Emirates, saying their metal exports had put American aluminum producers out of business and therefore threatened national security. He subsequently exempted aluminum from Argentina, Australia, Canada and Mexico and, just hours before his term ended, lifted the aluminum tariffs on the UAE.

Mr. Trump’s decision appeared to be motivated more by political than economic considerations. The decision to lift tariffs on the United Arab Emirates was led by White House officials, including Mr. Trump’s son-in-law, Jared Kushner, who had just carried out extensive negotiations to normalize relations between Israel and the United Arab Emirates. 

Politically Motivated But So What?

Lifting the tariffs was motived by politics. But in this case, so what? 

It was the correct thing to do regardless of motivation.

Biden flunked his first trade test. Unfortunately, I suspect more trade failures are on the way.

Mish

Comments (44)
No. 1-13
Frilton Miedman
Frilton Miedman

I don't think it preposterous to guess, maybe Kushner got something out of the deal and Biden knows.

He specifically went for the UAE tariff, none of the others...yet.

njbr
njbr

Quid pro quo, with the quid being announced on the Trump departure flight down to Mary-lego-my-eggo.

The most important thing in the world to do at the last minute--free the UAE state-supported aluminum industry to export to the US market. It'd be fun to see the ping pong of texts on that one.

CCBW
CCBW

the king is dead long live the king. around and around we go

amigator
amigator

Could be the second. Raising the minimum wage could be interpreted as a tariff against the US at least as it relates to the global arena.

Increase pay and open the borders....hmmm I wonder what will happen...

I hope that in a sign of unity he will remove the fence around the White House since walls don't work.

nzyank
nzyank

I trust Biden to make the right political decision unlike Trump. I also agree maintaining aluminum production in the US is a matter of national security. Mish's assessment of Biden in this matter seems a bit presumptive....

Sechel
Sechel

I never expected otherwise from Biden. Tariffs are welcomed in many quarters of the Democratic and progressive party. If you recall Bernie and Trump were closest on Economic and Trade than any other issue.There will be one distinction however in that Biden won't slap a tariff on a trading partner every time he has a bad phone call. Trump engaged in carousel tariff retaliation and you never knew what industry, country he would target and at what rate. The number were simply visceral based on what felt good to him. I'd note Biden also voiced support for the Jones act so I count this as Biden's second mistake at least. And there's simply no way Biden jumps on TPP which he should.

Eddie_T
Eddie_T

The era of open global trade facilitated by a strong US position as global hedgemon is simply coming to a close. It no longer serves the interest of the country the way it once did....and we can now look for a different world with new regional alliances....and more conflicts..between ancient rivals who are no longer going to be kept in check.

Biden is not going to be as abrasive and confrontational as Trump.....but he will take the political path of least resistance on this, I expect.

njbr
njbr

Some context helps on these matters helps to clarify the issues.

The US consumes about 3.5 million metric tons a year, but produces only 1.1 million metric tons.

And, yes, aluminum is a strategic defense product.

Primary aluminum production (millions of metric tons)

1 China 36.0
2 India 3.7
3 Russia 3.6
4 Canada 2.9
5 United Arab Emirates 2.7
6 Australia 1.6
7 Bahrain 1.4
8 Norway 1.3
9 United States 1.1
10 Saudi Arabia 0.93
11 Iceland 0.85
12 Malaysia 760
13 South Africa 714 2018

Eddie_T
Eddie_T

Silver anyone? This morning it looks like we might get to have another round of testing support..I put first real support on SLV around 24 and 2nd support at 22 or so. No MACD crossover after all....everything says a second but lesser down-leg this morning......to me anyway.

AnotherJoe
AnotherJoe

I think this is more related to the fact that UAE was the first one to turn its back with the Democrats policy to work the Palestinians in any peace plan with Israel. I think this has nothing to do with protectionism.

LawrenceBird
LawrenceBird

I think this is more about the future than the past. Biden probably plans to ease other tarrifs so does not want to be called 'soft' out of the gate. Also, everything that went down with Israel and UAE appeared to be the US buying UAE to agree to normalization of relations. This is just a way of saying that is over.

frozeninthenorth
frozeninthenorth

I would suggest a far less nefarious reason; Biden is simply killing all the appointments, changes that Trump did in the last 90 days in office. then when his team has the time to get everything in order they will reconsider. Frankly, if I was in his position I would do the same thing.

So many issues, so many crazy moves by Trump in the last days of office, a blanket cancelation of all Trumps' move is the only sane way to consider America's trade policy with the rest of the world.

Realist
Realist

Too bad that Biden is mirroring some of Trump's tariff policies. I find it amusing that many Americans cheer such measures, which are promoted as policies to MAGA. Using an American Football analogy: Your team keeps getting beat by it's competitors. In response to your team's poor performance, you arrange to handicap the competitors by forcing them to play with their shoelaces tied together. This does nothing to make your team better in the long run. If fact, it would reduce any incentive to become more competitive.


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