Trump’s ‘America First’ Vision Has Been Co-Opted

Government intervention in markets is not new, and it is very much a bipartisan affair. But large-scale industrial policies like those the Biden administration has gotten through Congress in the last few months are impressive, even by D.C.’s statist baseline.

The federal government’s decision to spend big on semiconductors, green energy and other industry subsidies has C-suite denizens smiling. But the trendsetters in all things industrial policy – the Europeans – are mad as hornets about it.

The reason: the majority of European companies aren’t eligible for U.S. subsidies (because like Trump before him, Joe Biden is a student of America first policies). Mr. Biden and French President Emmanuel Macron had a long talk about what to do to keep the peace among the Western statists. It wasn’t pretty. As The American Enterprise Institute’s Claude Barfield writes:

Macron, who has accused the US of gouging Europe on gas prices and “fragmenting the West” with the IRA, was initially not mollified. But then, attempting to rewrite history, Biden stated that there were “glitches” in the legislation and that he “never intended to exclude folks who were cooperating with us.” As a number of commentators have pointed out, however, Biden and his team knew the exact terms and effects of the IRA. What they seem not to have understood was the strong negative reaction among key US trading partners, particularly in Europe and Asia, while making no attempt to revise the local content provisions.

Biden promised Macron that the US and EU could “work out some of the differences,” suggesting specifically the exception for nations that had trade agreements with the US could be more broadly interpreted and not confined only to agreements that had formally received congressional approval. (Since the meeting, it has also been suggested that nations who had joined the WTO government procurement articles could form the basis for exceptions.)

Biden’s diplomatic back-peddling quickly ran into a wall of political reality:

First, Congress was explicit in the local content mandate. As Sen. Joe Manchin (D-WV), who was central to the passage of the legislation, stated flatly: “We did it to help the United States of America.” Thus, there is no chance the administration could get congressional approval for revisions.

Second, Biden’s proposal will cause complications almost immediately with non-European trading partners, particularly in Asia…Are France and Germany more vital to US interests than Indonesia, Japan, and South Korea?

We’ll just have to find out. But there’s a lesson here one might have thought for Biden, a lifelong pol: once you start handing out favors (or subsidies), more people will demand a piece of the action. If it sounds a bit like a racket, you’re not wrong. Europeans know a lot about those, too.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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