The new tariffs President Biden announced last week aren’t economically significant. Symbolically, they are huge.
The U.S. buys almost no electric vehicles, steel or semiconductors—all targets of the tariffs—from China. But, by adding to, rather than rescinding, tariffs imposed in 2018 by former President Donald Trump, it signals that the decoupling of the Chinese and U.S. economies is becoming irreversible.
More important, the tariffs are the final piece of an economic strategy for competing with China.
This strategy is a three-legged stool. The first consists of subsidies to build a viable technology manufacturing sector, from clean energy to semiconductors. The second is tariffs on Chinese imports that threaten those efforts. The third is restrictions on access to money, technology and know-how that could help China compete. A fourth leg, a unified economic front with allies, remains unrealized.
Biden's new tariffs round out a three-legged strategy for competing with China. Leg 1: subsidies to build a viable technology manufacturing sector, from clean energy to semiconductors. 2: tariffs on Chinese imports that threaten those efforts. 3: restrictions on access to money,…
— Greg Ip (@greg_ip) May 20, 2024