In an election year where both political parties have deployed tariffs as a tool of statecraft, @DemJournal asked @ENPancotti @mattyglesias and me to debate the pros and cons, when tariffs work, and when they are damaging.
🧵 democracyjournal.org/magazine/74/ar…
Liz and I were assigned the "pro-tariff" side of the debate, though we offer caveats.
Our main argument is that it's too easy to put tariffs in a politics/public choice box, when in fact there are long established market failure reasons for their use.
Moreover, having taking the fork in the road towards industrial policy subsidies to internalize positive externalities from decarbonization, it would have been unwise policy/an abdication of fiduciary responsibility to allow imports to wipe out new clean industries.
We suggest some reforms, including making the trade remedies system less remedial/more proactive, using guardrails to constrain profiteering in protected industries, expanding trade to better service the climate strategy, and generally being better at stating goals.
That leads to one of @mattyglesias' major points, which is that imposers of tariffs need to be better at explaining the trade-offs involved in design decisions.
Matt also argues that national security reasons are a sufficient condition for imposing select tariffs, without needing recourse to economics.
He also argues that, if we are restricting trade with China for natsec reasons, we should compensate by freeing trade with allies.
In our response, Liz and I argue that there are practical reasons why tariffs get deployed when tackling market failures occurring outside US territory. The integrity of domestic policy regimes - including labor protections - benefit from a more level international playing field.
While agreeing aspirationally with Matt that freer trade with allies is a goal, Liz and I also note that have been recent practical difficulties in doing so, and that market shaping prerogatives should be placed on a level with diplomatic amity ones.
In his final essay, Matt turns to a major argument against tariffs - their effect on domestic consumers.
Matt also posits that domestic labor law reform is a better means of domestic redistribution than tariffs.
In the format of the debate, the conversation ends there.
But let me say for the record: labor law reform is indeed preferrable to tariffs as a means of redistribution, and helps poorer consumers finance their consumption basket.
And, for a targeted and effective way to deploy trade tools, look no further than the dozens of cases @AmbassadorTai @USTradeRep have launched under the USMCA Rapid-Response Labor Mechanism, which has helped 30,000 workers exercise their rights. ustr.gov/issue-areas/en…
In closing, the US is attempting to do something difficult: transforming its economy and all its parts and putting them on a sounder footing.
This is the result of a 4 year review since the beginning of the Biden administration, which has been evaluating whether various Chinese policies comport with US trade laws.
Fantastic panel @HarvardMWC on lessons we can learn from global experiences with industrial policy, with @rodrikdani @straightedge @myrto_kaloup and @rohlamba.
Myrto talking Chinese shipbuilding excess capacity. Has 50-70% market share today.
@Rohan_Sandhu Myrto says Chinese shipbuilding not efficient when taken on their own, but had clear benefits in terms of outward exports / lowering transportation costs / enhancing military capacity. nber.org/papers/w26075
NEW from me @RooseveltFwd: How Biden's comments on US Steel's tie up with Japan's Nippon company indicate what a Foreign Policy for the Middle Class might look like in practice. rooseveltforward.org/2024/04/03/bid…
The idea of reorienting foreign economic policy to build labor power and combat inequality was articulated by @JakeSullivan46 @jennifermharris and others in a series of essays and reports in 2019-20. foreignpolicy.com/2020/02/07/ame…
This doesn't mean that traditional diplomacy has to die out. Indeed, as @dimi and @KanaInagaki report, even after Biden's comments, the US and Japan are slated to make the biggest upgrade to their alliance in 60 years. ft.com/content/df9999…
BREAKING from @AP: @Energy agency announces $6 billion to slash emissions in industrial facilities.
@JenMcDermottAP @anniesartor @SecGranholm @alizaidi46 and me on why this is game changing, and could allow the US to catch up/ lead on industrial decarb. apnews.com/article/climat…
The mix of projects funded here is exciting, including a range of technologies to be deployed by US leader @CLE_CLF, and even projects by Sweden's SSAB. energy.gov/oced/industria…
"EVEN IF YOU’RE CONVINCED that unionized labor is sclerotic and expensive and an impediment to production, cutting them out creates the very real risk of losing the coalition necessary to sustain green industrial policy."
@ddayen responds to @ezraklein. prospect.org/economy/2023-0…
I am sympathetic to Klein's wish to live in a society with more corporatist labor arrangements.
https://t.co/5jiumaovWrnytimes.com/2023/07/16/opi…
Want government that builds super fast, without the pesky guardrails of civil society input, local government consultation, or environmental or safety permitting?
The last 70 years of development economics has been technocrats & engineers slowly learning that you can't wish away politics and institutions. If your developmental strategy can't work politically and institutionally, it can't work.
That's why @ddayen's framework @TheProspect of A Liberalism That Builds Power is so useful. If you try to Either/Or your way through economic development or (countervailing) power-building, you could end up with neither. prospect.org/economy/2023-0…