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Com. Org/everywhere. From the New York Times, I'm Sabrina Tavernisi, and this is The Daily. Donald Trump upended decades of American policy when he started a trade war with China. Many thought that President Biden would reverse those policies. Instead, he's stepping them up. Today, my colleague, Jim Tankersley, explains. It's Monday, May 13th. Jim, it's very nice to have you in the studio.

It's so great to be here, Sprina. Thank you so much.

We are going to talk today about something I find very interesting, and I know you've been following. We're in the middle a presidential campaign. You are an economics reporter looking at these two candidates, and you've been trying to understand how Trump and Biden are thinking about our number one economic rival, and that is China. As we know, Trump has been very loud and very clear about his views on China. What about Biden?

Well, no one is going to accuse President Biden of being as loud as former President Trump, but I think he's actually been fairly clear in a way that might surprise a lot of people about how he sees economic competition with China. We're going after China in the wrong way. China is stealing intellectual property. China is condition- Biden has, surprisingly, sounded a lot in his own Joe Biden way like Trump. They're not competing. They're cheating. We've seen the damage here in America. He has been very clear that he thinks China is cheating in trade. The bottom line is I want fair competition with China, not conflict. We're in a stronger position to win the economic competition in the 21st century against China or anywhere else because we're investing in America and American workers again. China. Maybe the most surprising thing from a policy perspective is just how much Biden has built on top of the anti-China moves that Trump made, and really is on the verge of his own trade war with with China.

Interesting. So remind us, Jim, what did Trump do when he actually came into office? We, of course, remember Trump really talking about China and just banging that drum hard during the campaign. But remind us what he actually did when he came into office.

Yeah, it's really instructive to start with the campaign, right? Because Trump is talking about China in some very specific ways. We have a $500 billion deficit, trade deficit with China. We're going to turn it around and we have the cards. Don't forget They're ripping us off. They're stealing our jobs. They're using our country as a piggy bank to rebuild China, and many other countries are doing the same thing. So we're losing our good jobs. The economic context here is the United States has lost a couple of million jobs in what was called the China shock of the early 2000s, and Trump is tapping into that. But when the Chinese come in and they want to make great trade deals, and they make the best trade deals, and not anymore. When I'm there, we turn it around, We turn it around. We have a- What he's promising as president is that he's going to bring those jobs back. I'll be the greatest jobs president that God ever created. I'll take them back from China, from Japan, from- And not just any jobs, like Good paying manufacturing jobs, all of it. Clothes, shoes, steel, all of these jobs that have been lost that American workers, particularly in the industrial Midwest, used to do.

Trump's going to bring them back with policy meant to rebalance the trade relationship with China to get a better deal with China.

Right. So he's saying China is eating our lunch and has been for decades. That's the reason why factory workers in rural North Carolina don't have work. It's those guys, and I'm going to change that.

He likes to say, It's because our leaders didn't cut the right deal with them, so I'm going to make a better deal. To get a better deal, you need leverage. A year into his presidency, he starts taking steps to amass leverage leverage with China.

What does that look like?

Just an hour ago, surrounded by a handpicked group of steelworkers, President Trump revealed he was not bluffing them. It starts with tariffs. Tariffs are taxes that the government imposes on imports. Two key global imports into America now face a major new barrier. Today, I'm defending America's national security by placing tariffs on foreign imports of steel and aluminum. In this case, it's imports from a lot of different countries, but particularly China. But take it straight to the White House, the President of the United States, announcing new trade tariffs against China. Let's listen in. This has been long in the making. You've heard many- So Trump just starts in 2018. This series of tariffs that he's imposing on all sorts of things: washing machines, solar panels, steel, aluminum. I went to Delaware to a lighting store at that time, I remember, where basically everything they sold came from China and was subject to the Trump tariffs because that's where lighting was made now. Interesting. Hundreds of billions of dollars of Chinese goods now start falling under these Trump tariffs. The Chinese, of course, don't take this lying down.

China says it is not afraid of a trade war with the US, and it's fighting back against President Trump with its own tariffs on US goods.

They do their own retaliatory tariffs. Now, American exports to China cost more for Chinese consumers. And boom, all of a sudden, we in the midst of a full-blown trade war between the United States and Beijing. Right.

And that trade war was a shock, right? Because for decades, politicians had avoided that policy. It was the consensus of the political class in the United States that there should not be tariffs like that. It should be free trade. And Trump just came in and blew up the consensus.

Yeah. As Sprint, I may have mentioned this once or 700 times before program, but I talk to a lot of economists in my job. Oh, really? Yeah, it's weird. I talk to a lot of economists. In 2018, when this started, there were very, very, very few economists of any political persuasion who thought that imposing all these tariffs were a good idea. Republican economists, in particular, this is antithetical to how they think about the world, which is low taxes, free trade, and even Democratic economists who thought they had some problems with the way free trade had been conducted, did not think that Trump's, I'm going to get a better deal approach was going to work. There was just a lot of criticism at the time, and a lot of politicians really didn't like it. A lot of Democrats, many Republicans. It all added up to just a real, whoa, I don't think this is going to work.

So that begs the question, did it?

Well, it depends on what you mean by work. Economically, it does not appear to have achieved what Trump wanted. There's no evidence yet in the best economic research that's been done on this, that enormous amounts of manufacturing jobs came back to the United States because of Trump's tariffs. There was research, for example, on the tariffs on washing machines. They appear to have helped a couple of thousand jobs, manufacturing jobs, be created in the United States. But they also raised the price of washing machines for everybody who bought them by enough that each additional job that was created by those terrorists effectively cost consumers $800,000 per job. Interesting. There's just lots of evidence that the sectors Trump was targeting to try to help here. He didn't. There just wasn't a lot of employment rebound to the United States. But politically, it really worked. The terrorists were very popular. They had this effect of showing voters in those hollowed out manufacturing areas that Trump was on their team and that he was fighting for them. Even if they didn't see the jobs coming back, they felt like he was standing up for them. The research suggests this was a savvy political move by Trump, and in the process, it changes the political-economic landscape in both parties in the United States.

Right. So Trump made these policies that seemed for many, many years in the American political system, fringe, isolationist, economically bad, suddenly quite palatable and even desirable to mainstream policymakers.

Yeah. Suddenly getting tough on China is something everyone wants to do across both parties. And so from a political messaging standpoint, being tough on China is now where the mainstream is. But at the same time, there's still big disagreement over whether Trump is getting tough on China in the right way, whether he's actually being effective at changing the trade relationship with China. Remember that Trump was imposing these tariffs as a way to get leverage for a better deal with China? Well, he gets a deal of sorts, actually, with the Chinese government, which includes some things about tariffs and also China agreeing to buy some products from the United States. Trump spins it as this huge win, but nobody else, really, including Republicans, acts like Trump has solved the problem that Trump himself has identified. This deal is not enough to make everybody go, Well, everything's great with China now. We can move on to the next thing. China remains this huge issue, and the question of what is the most effective way to deal with them is still an animating force in politics.

Got it. So politically, huge win, but policy-wise and economically and fundamentally, the problem of China still very much unresolved.

Absolutely.

So then Biden comes in. What does Biden do? Does he keep the tariffs on?

Biden comes to office, and there remains this real pressure from economists to roll back what they consider to be the ineffective parts of Trump's trade policy. That includes many of the tariffs. It's especially true at a time when almost immediately after Biden takes office, inflation spikes. Americans are paying a lot of money for products, and there's this pressure on Biden, including from inside his administration, to roll back some of the China tariffs to give Americans some relief on prices. Biden considers this, but he doesn't do it. He doesn't reverse Trump's tariff policy. In the end, he's actually building on it.

We'll be right back.

I'm Kevin Ruse. And I'm Casey Newton. We're technology reporters and the hosts of Hard Fork, a show from the New York Times. A hard fork is a programming term for when you're building something that gets really screwed up. So you take the entire thing, break it, and start over. And that's a little bit what it feels like right now in the tech industry. These companies that you and I have been writing about for the past decade, they're all struggling to stay relevant? Yeah, I mean, a lot of the energy and money in Silicon Valley is shifting to totally new ideas. Crypto, the metaverse, AI. It feels like a real turning point. And all this is happening so fast. Some of it's so strange. I just feel like I'm texting you constantly. What is this story? Explain this to me. And so we're going to talk about these stories. We're going to bring in other journalists, newsmakers, whoever else is involved in building this future to explain to us what's changing and why it all matters. Hard Fork from the New York Times. Listen wherever you get your podcasts.

So, Jim, you said that Biden is actually building on Trump's anti-China policy. What exactly does that look It's like.

Biden builds on the Trump-China policy in three key ways, but he does it with a really specific goal that I just want you to keep in mind as we talk about all of this, which is that Biden isn't just not trying to beat China on everything. He's not trying to cut a better deal. Biden is trying to beat China in a specific race to own the clean energy future.

Clean energy Energy. Yeah.

Keep that in mind. Clean energy. An animating force behind all of the things Biden does with China is that Biden wants to beat China on what he thinks are the jobs of the future, and that's green technology.

Got it. Okay. What does he do first?

Okay. Thing number one, let's talk about the tariffs. He does not roll them back, and actually, he builds on them. For years, for the most part, he just lets the tariffs be. His administration reviews them, and it's only now, this week, when his administration is going to actually act on the tariffs, and what they're going to do is raise some of them. They're going to raise them on strategic green tech things like electric vehicles, in order to make them more expensive. I think it's important to know the backdrop here, which is since Biden has taken office, China has started flooding global markets with really low cost green technologies. Solar panels, electric vehicles are the two really big ones. Biden's aides are terrified that those imports are going to wash over the United States and basically wipe out American automakers, solar panel manufacturers, that essentially if Americans can just buy super cheap stuff from China, they're not going to buy it from American factories. Those factories are going to go out of business.

Biden's goal of manufacturing jobs and clean energy, China is really threatening that by dumping all these products on the American market.

Exactly. What he wants to do is protect those factories with tariffs. That means increasing the tariffs that Trump put on electric vehicles in hopes that American consumers will find them too expensive to buy.

But doesn't that go against Biden's goal of clean energy and things better for the environment? I mean, lots of mass market electric vehicles into the United States would seem to advance that goal. Here he's saying, no, you can't come in.

Because Biden isn't just trying to reduce emissions at all costs. He wants to reduce emissions while boosting American manufacturing jobs. He doesn't want China to get a monopoly in these areas. He's also, in particular, worried about the politics of lost American manufacturing jobs. Biden does not want to just let you buy cheaper Chinese technologies, even if that means reducing emissions. He wants to boost American manufacturing of those things to compete with China, which brings us to our second thing that Biden has done to build on Trump's China policy, which is that Biden has started to act like the Chinese government in particular areas by just showering American manufacturers with subsidies. I see.

Dumping government money into American businesses.

Yes. Tax incentives, direct grants. This is a way that China has, in the past decades, built its manufacturing dominance is with state support for factories. Biden is trying to do in particular targeted industries, including electric vehicles, solar power, wind power, semiconductors. Biden has passed a bunch of legislation that just showers those sectors with incentives and government support in hopes of growing up much faster American industry.

Got it. Basically, Biden trying to beat China at his own game.

Yeah, he's essentially using tariffs to build a fortress around American industry so that he can train the troops to fight the clean energy battle with China.

And the troops being American companies. Yes.

It's like we're going to give them protection, protection as policy, in order to get up to size, get up to strength as an army in this battle for clean energy dominance against the Chinese. Got it.

He's trying to build up the fortress. What's the third thing Biden does? You mentioned three things.

Biden does not want the United States going it alone against China. He's trying to build an international coalition. Wealthy countries and some other emerging countries that are going to take on China and try to stop the Chinese from using their trade playbook to take over all these new emerging industrial markets.

But, Jim, why? What does the US get from bringing our allies into this trade war? Why does the US want that?

Some of this really is about stopping China from gaining access to new markets. It's like if you put the low cost Chinese exports on a boat and it's going around the world looking for a dock to stop and offload the stuff and sell it, Biden wants barriers up at every possible port, and he wants factories in those places that are competing with the Chinese. A crucial fact to know here is that the United States and Europe, they are behind China when it comes to clean energy technology. The Chinese government has invested a lot more than America and Europe in building up its industrial capacity for clean energy. America and its allies want to deny China dominance of those markets and to build up their own access to them.

They're behind, so they got to get going. It's like they're in a race and they're trailing.

Yeah, it's an economic race to own these industries, and it's that global emissions race. They also want to be bringing down fossil fuel emissions faster than they currently are, and this is their plan.

Right. I guess, Jim, the question in my mind is, Trump effectively broke the seal, right? He started all of these terraces. He started this trade war with China. But he did it in this jackhammer, non-targeted way, and it didn't really work economically. Now Biden is taking it a step further. But the question is, is his effort here going to work?

The answer to whether it's going to work really depends on what your goals are. Biden and Trump have very different goals. If Trump wins the White House back, he has made very clear that his goal is to try to rip the United States trade relationship with China even more than he already has. He just wants less trade with China and more stuff of all types made in the United States that used to be made in China. That's a very difficult goal, but it's not Biden's goal. Biden's goal is that he wants America to make more stuff in these targeted industries. There is real skepticism from free market economists that his industrial policies will work on that. But there's a lot of enthusiasm for it from a new strain of Democratic economists in particular, who believe that the only chance Biden has to make that work is by pulling all of these levers by doing the big subsidies and by putting up the tariffs that you have to have both the troops training and the wall around them. If it's going to work, he has to build on the Trump policies. I guess you're asking, will it work?

It may be dependent upon just how far he's willing to go on the subsidies and the barriers.

There's a chance of it.

Yeah.

Jim, at the highest level, whatever the economic outcome here, it strikes me that these moves by Biden are pretty remarkably different from the policies of the Democratic Party over the decades. I mean, really going in the opposite direction, right? I'm thinking of Bill Clinton and NAFTA in the 1990s, free trade was the real central mantra of the Democratic Party, really of both parties.

Yeah, and Biden is a real break from Clinton. Clinton was the one who actually signed the law that really opened up trade with China, and Biden's a break from that. He's a break from even President Obama when he was vice President. Biden is doing something different. He's breaking from that democratic tradition, and he's building on what Trump did, but with some throwback elements to it. From the Roosevelt administration and the Eisenhower administration. This is this grand American tradition of industrial policy that gave us the space race and the interstate highway system. It's the idea of using the power of the federal government to build up specific industrial capacities. It was in vogue for a time. It fell out of fashion and was replaced by this idea that the government should get out of the way and you let the free market drive innovation. Now that industrial policy idea is back in vogue and Biden is doing it.

It isn't just a shift or an evolution. It's actually a return to big government spending of the '30s and the '40s and the '50s of American industrialism of that era. So what goes around comes around.

Yeah, and it's a return to that older economic theory with new elements. It's in part because of the almost jealousy that American policymakers have of China and the success that it's had building up its own industrial base. But it also has this political element to it. It's in part animated by the success that Trump had making China an issue with working-class American voters. You didn't have to lose your job to China to feel like China was a stand-in for the forces that have taken away good paying middle class jobs from American workers who expected those jobs to be there. And so Trump tapped into that, and Biden is trying to tap into that. And the political incentives are pushing every future American President to do more of that. So I think we are going to see even more of this going forward, and that's why we're in such an interesting moment right now.

So we're going to see more fortresses.

More fortresses, more troops, more money. Jim, thank you. You're welcome.

We'll be right back. Here's what else you should know today. Intense fighting between Hamas fighters and Israeli troops groups raged in parts of Northern Gaza over the weekend, an area where Israel had declared Hamas defeated earlier in the war, only to see the group reconstitute in the power vacuum that was left behind. The persistent lawlessness raised concerns about the future of Gaza among American officials. Secretary of State, Anthony Blinken, said on Face the Nation on Sunday that the return of Hamas to the north left him concerned that Israeli victories there would be, not sustainable, and said that Israel had not presented the United States with any plan for when the war ends. And the United Nations Aid Agency in Gaza said early on Sunday that about 300,000 people had fled from Ra'afa over the past week, the city in the enclave's Southernmost tip, where more than a million displaced Gazans had sought shelter from Israeli bombardments elsewhere. The UN made the announcement hours after the Israeli government issued new evacuation orders in Ra'afa, deepening fears that the Israeli military was preparing to invade the city despite international warnings. Today's episode was produced by Nina Feldman, Carlos Prieto, Sydney Harper, and Luc Vandenpleeg.

It was edited by MJ Davis Lynn, Brenda Clinkenberg, and Lisa Chou. Contains original music by Diane Wong, Marion Lozano, and Dan Powell, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Lansberg of WNDYRLE. That's it for The Daily. I'm Sabrina Tavernisi. See you tomorrow.