Buttigieg is the Latest Top Biden Official to Advocate for China Tariffs

Buttigieg said that when industry falls apart, communities fall apart, too. And that he has seen it firsthand in Indiana.

“We have to make sure that as the auto industry shifts to EVs, it’s an America-made EV revolution,” he said.

Buttigieg did not praise the need for tariffs across the board, but he has joined a group of top Biden officials warming up to protecting U.S. industries from China, and other low-wage producing countries.

Moreover, Treasury Secretary Janet Yellen recently threw a bucket of cold water on the market’s idea that tariffs lead to high inflation.

“I don’t believe that American consumers will see any meaningful increase in the prices that they face,” Yellen said in an interview where she discussed tariffs with PBS NewsHour.

Worth noting, core inflation has come down in the last month ending in June, even as Biden extended the 301s and added new tariffs on semiconductor imports from mainland China in May.

Yellen has been focused primarily on China’s overproduction of goods, which they fail to sell at home and manufacture for export markets. That means you have a lot of people paid low wages making things for the U.S. and the world, rather than making products for sale at home in China. Like Buttigieg, Yellen seems more interested in targeted tariffs than the broader tariff policy of the previous administration. Her emphasis is always on overproduction and “strategic sectors” of the economy, like new so-called green technologies.

“It’s very important to protect our workers and our firms in these strategic sectors from the kind of dumping that results when China develops massive overcapacity in these areas,” she said.

In remarks to the Center for American Progress in May, National Economic Council Director Lael Brainard said that, “We have learned from the past. There can be no second China shock here in America. China is using the same playbook it has before to power its own growth by investing in significant industrial overcapacity and flooding global markets with artificially cheap exports.”

CPA’s economic team ran an economic model to simulate the impact of a 10% universal tariff. The results showed that such a policy could lead to increased growth in the domestic economy, higher real wages, gains in employment, and provide the revenue from the tariff to enable a tax cut for middle to lower-income wage earners.

You can see the results of that study here.

There is a view shift on global economics among some well-respected individuals both here and in Europe.  Some say it started in earnest during the Trump administration, where he proved tariffs are not really inflationary, nor would they destroy markets.

Economist and Nobel laureate Paul Romer even attacked free trade in February, telling Bloomberg News that cheap imports are much less significant for long-term growth, especially when the adjustment costs of people losing their jobs in traditional industries are large and socially divisive.

“High school educated workers are dying younger, they are dying from deaths of despair,” said Romer, who won the Nobel Prize in 2018. “These are underlying indicators that tell us life is not getting better, it is getting worse for a large fraction of people here.”

On Thursday, Feb. 15^th, former European Central Bank president Mario Draghi gave a speech at the National Association of Business Economists’ Annual Conference in Washington where he said globalization had not worked out as expected. He said it was time to move past what he called the “globalized world trade order.”

He blamed globalization for the economic harm suffered by millions of workers in the West and the turn to populist leaders looking to oust established powers. This is likely one of the reasons why Biden kept the Trump-era policies – because they were deemed politically prudent for working class voters.

Prosperity depends on a nation investing in the right industries that can propel growth forward over a period of decades, wrote CPA chief economist Jeff Ferry in April.

“The 2016 election of Donald Trump as president marked a sea-change in the way the political class thought about the U.S. economy,” Ferry wrote. “Since then, both the Trump and Biden administrations have sought to rebuild U.S. manufacturing industries through tariffs, tax credits, and other policies.”