Plus: Be the smartest person at your presidential debate watch party tonight, and more
June 27, 2024 [View in browser]( Good morning! Today, senior correspondent Dylan Matthews is here to ask whether America is turning against international trade.
âCaroline Houck, senior editor of news [US Trade Representative Katherine Tai in front of an American flag] Win McNamee/Getty Images The most important Biden Cabinet member you donât know âIâm really tired of being called a protectionist,â [Katherine Tai](, President Joe Bidenâs trade representative and a leading architect of his confrontational economic approach to China, told me on Monday. Given what Bidenâs opponent has been saying lately, I empathize. Former President Donald Trump reportedly told Republican lawmakers he wants [an âall tariffâ policy](, in which all federal taxes would be replaced with taxes on imports. In the near term, Trump has [committed to a 10 percent tariff]( on all imports from any country. Next to proposals like that â which would explode consumer prices and make the tax code far more regressive â Biden and Tai sound like free-traders. But compared to the bipartisan consensus that prevailed until Trump took office, I think âprotectionistâ is fair. Tai and Biden have continued many of Trumpâs tariffs from his term, [in defiance of World Trade Organization (WTO) rebukes](. This spring saw a [flurry of new Biden tariffs targeting China](, most notably hitting electric vehicles and batteries. Tai and the administration see themselves as charting a new course, reversing anti-worker trade policies of the past. âWe have shunted workers to the side,â Tai told my colleague and Today, Explained host Noel King, âand we need a domestic and international economic policy that champions the interests of our people.â But was the previous era really so bad? And are the Biden administrationâs policies helping matters? [biden in a crowd] Christopher Furlong/Getty Images Global trade helped the poor catch up From the perspective of humanity as a whole, the period of hyper-globalization starting in 1990 was kind of miraculous. [Growth rates in poor countries have sped up markedly](, and economists have found they were gradually âconvergingâ toward rich countries. This era saw [dramatic reductions in extreme poverty](, especially but not solely in China. For manufacturing workers in rich countries, however, the consequences were grim. Regions and industries in the US exposed to competition from Chinese imports saw [declining employment](, [lower lifetime incomes](, and even [higher drug overdoses](. At the same time, [researchers](, including [those who identified some of the biggest costs of the âChina shock,â]( have found that the US as a whole benefited from trade with China, albeit modestly. Chinese imports lowered the cost of goods, which raises living standards for poor people in particular, given [how much more they have to spend on consumer goods]( as a share of their income than the well-off. We could preserve the gains from globalization to both the world and the US while addressing its very real costs by combining open trade with more assistance to workers displaced in the process, such as through the [successful Trade Adjustment Assistance program](. However, [critics have long contended]( that the redistribution offered to those whoâve lost out has been, in practice, far too limited. Thatâs fed a desire for a more confrontational attitude toward exporters like China, culminating in the tariffs adopted by Trump and largely continued by Biden. [clothing label stating ''Made in China''] Johannes Eisele/AFP via Getty Images The Trump tariffs didnât work In her interview with Vox, Ambassador Tai contended that consumers do not necessarily wind up paying the cost of high tariffs. âWhen we have started looking back at the last five and six years of prices in the United States, you did not see an automatic increase in prices as a result of tariffs,â she told King. After all, the companies that import goods could simply choose not to pass along the cost of tariffs to their customers. Except, in reality, they always do pass along the cost. At least [four]( [different]( [high-quality]( [studies]( have looked at the Trump tariffs. All have found âcompleteâ or âalmost completeâ passthrough: that is, the tariffs were paid for entirely or almost entirely by US consumers in the form of higher prices. Make no mistake: US consumers pay for tariffs we impose. Meanwhile, [Trumpâs tariffs did not succeed in creating jobs in the US](. They did, however, destroy jobs in agriculture by prompting China to retaliate with its own tariffs, particularly on soybeans and cotton. Itâs not clear to me that Bidenâs tariff regime will be any more successful at preserving or adding jobs in sectors like battery and auto manufacturing. Even though they were an economic dud, the researchers found the tariffs were a political success. Areas protected by Trumpâs tariffs were more likely to vote for him in 2020. Though Tai certainly believes in tariffs against China on the merits, you donât have to be a total cynic to wonder how much political factors are driving the Biden administrationâs tariff policy too. Trade and the world order Tai has also continued the Trump policy of [obstructing appointments to the WTOâs appeals board]( and spent much of our interview criticizing the global trade body for inadequately fighting Chinaâs protectionist policies. She and her team have been [talking a lot]( about the [International Trade Organization](, a never-created agency floated 80 years ago by President Franklin D. Roosevelt. They see it as a more pro-worker, pro-environment, and anti-monopoly vision of what international cooperation on trade might look like. FDR, Tai told me, understood the power of âmarket-based economies coming together to fend off the challenges of fascism on the right and communism on the left.â As an economic history nerd, I find discussions about FDRâs trade philosophy fascinating, but I did not expect to have one with a White House Cabinet member in 2024. We donât have an ITO because the [US Congress]( blocked it in 1950. If you look through the [institutionâs charter](, which Tai is right to say includes a lot of tough anti-monopoly and labor rights language, âa lot of it is not something the US Congress would ever sign up for,â [Inu Manak](, a trade policy expert at the Council on Foreign Relations, says. Tai is surely thinking about China when she invokes the dream of an organization uniting âmarket-based economiesâ against fascism and communism. But at the same time, she is defending [tariffs on steel and aluminum]( that apply to almost all countries, not just China. The Biden administrationâs [Buy American provisions]( hurt allies like South Korea too, and Biden is [opposing a Japanese companyâs effort to purchase US Steel](. Is this really just about China, or a more general (hereâs that word Tai hates again) protectionist turn? I hope Iâm wrong. Tai has expressed [strong support for US trade preferences toward Africa](, which gives me some optimism that the new paradigm she represents will treat poor countries fairly. But so far, the new trade approach is mostly reminding me of how much we gained from the old one â and how much we might lose by abandoning it. â[Dylan Matthews, senior correspondent]( [Listen]( The end of Made in China? President Joe Biden recently raised Trump-era tariffs, which could lead to even higher prices on Chinese imports. US Trade Representative Katherine Tai explains the Biden administrationâs approach to trade with China, and Voxâs Dylan Matthews helps make sense of the changes. [Listen now]( BE THE SMARTEST PERSON AT YOUR DEBATE WATCH PARTY - Bidenâs border record: Trumpâs claims vs. reality: The border trends during Bidenâs presidency, and how his policies played into them, explained. [[Vox](]
- Why do Americans always think crime is going up?: Crime is actually falling. Here are three theories on why that doesn't seem to reassure voters. [[Vox](]
- The winners and losers of the Biden economy: Younger workers have done well under Biden. Fast-food fans have not. [[Vox](]
- If Trump wins, what would hold him back?: The guardrails of democracy reined him in last time. But theyâre weakening. [[Vox](]
- What two years without Roe looks like, in 8 charts: After the Republican majority on the Supreme Court overturned Roe v. Wade, Americans are confronting a whole new reality of patchwork abortion access. [[Vox](]
- We rewatched the 2020 Trump-Biden debates: Thereâs so much we didnât see coming.[[Vox](] [trump and biden at a 2020 presidential debate]( Brendan Smialowski and Jim Watson/AFP via Getty Images ALSO IN THE NEWS - How should a silk skirt look?: Get smart on womenâs fashion, and the online debates around âbias-cutâ clothes. [[Marie Claire](]
- Do extreme wildfires feel like theyâre happening more often?: Youâre not wrong. A new study found theyâve doubled in the last two decades, becoming far more common and more intense. [[NYT](]
- Someone call [Lana Del Rey]( â summertime SADness is real: Seasonal depression can hit in warmer months, too. Hereâs how to cope. [[Vox](] Ad We still donât really know how inflation works It's one of the most significant issues shaping the 2024 election. But how much can we actually do to control it? [Listen now]( Are you enjoying the Today, Explained newsletter? Forward it to a friend; they can [sign up for it right here](. Love Vox podcasts? Then help us make a new one, launching this fall! Each episode will start with a question from Vox readers and listeners â ranging from the heavy to the silly, the systemic to the personal. Weâll cover culture, finance, politics, technology, and more! Anything from why dating feels harder these days to why jars are so hard to open. If you want something in your world explained, and Google canât get you the answer, submit questions to askvox@vox.com or give us a call at 1-800-618-8545. Todayâs edition was produced and edited by Caroline Houck. We'll see you tomorrow! [Become a Vox Member]( Support our journalism â become a Vox Member and youâll get exclusive access to the newsroom with members-only perks including newsletters, bonus podcasts and videos, and more. [Join our community]( Ad [Facebook]( [Twitter]( [YouTube]( [Instagram]( [TikTok]( [WhatsApp]( This email was sent to {EMAIL}. Manage your [email preferences]( [unsubscribe](param=sentences). If you value Voxâs unique explanatory journalism, support our work with a one-time or recurring [contribution](. View our [Privacy Notice]( and our [Terms of Service](. Vox Media, 1701 Rhode Island. NW, Washington, DC 20036.
Copyright © 2024. All rights reserved.