Biden Administration Doubles Down on Costly “Buying American” Mandates

James Bacchus

While praising the “new” trade policy of the Biden administration during a recent interview with PBS, U.S. Trade Representative Katherine Tai described this policy as “pro‐​competition.” It seems to me, instead, that the Biden policy in international trade is, instead, anti‐​competition. The protectionism of the current administration, now in full display after nearly two and one‐​half years, is about insulating domestic producers from foreign competition.

In part, this policy is being pursued through conventional tariffs, such as the unilateral tariffs on hundreds of billions of dollars in annual trade with China. In part, it is being pursued through the application of tariffs as inflated trade remedies. Soon, a new part of this policy may include approval of discriminatory congressional proposals for carbon border tax adjustments. In part, too, this policy is evidenced in the conditions attached to the subsidies that are being handed out to businesses as one dimension of a much‐​touted but much‐​misunderstood “industrial policy” that purports to be new but is mostly a return to the self‐​defeating protectionism of the past.

One particularly egregious form of such protection is the proliferation of domestic content mandates, which are central to last year’s Inflation Reduction Act (IRA). As the subsidies in the IRA are rolling out, we are starting to see how harmful these domestic content mandates are to the competitiveness of American workers, American businesses, and the overall American economy. Although “Buying American” sounds red‐​white‐​and‐​blue patriotic in a political campaign or in a meeting with congressional constituents, Americans pay a high price for this form of protectionism. For my further thoughts on these ill‐​advised mandates, see my new Cato paper, “The High Price of Buying American: The Harms of Domestic Content Mandates.”

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