The One Thing Biden Misses With His Semiconductor War With China

President Joe Biden has embraced much of former President Donald Trump’s trade policy. The tariffs hitting many allies, as well as foes on aluminum and steel, appear unlikely to go away soon, and the broad Trump tariffs on many Chinese goods appear entrenched.

Biden has replaced America First with an emphasis on the impacts of trade policy on ordinary Americans as workers—as opposed to just as consumers benefiting from lower prices. A move with broad potential to place politics and protectionism above efficiency and growth in evaluating deals.

Photo by CHUTTERSNAP on Unsplash

Dangerous notions

Biden has elevated industrial policy even above the level afforded by President Barack Obama. He recognizes semiconductors as ground zero in economic and strategic competition with China and is seeking a Western alliance to secure that industry.

The administration’s notion that we can both simultaneously compete commercially with China and cooperate on matters such as climate change and pandemic control is dangerous. President Xi Jinping is obsessed with technological dominancereunification with Taiwanmarginalizing the United States in Southeast Asia and usurping the liberal world order but most of all, he is paranoid and shortsighted.

How else to explain his resistance to cooperating with the World Health Organization on COVID, and bearing the cost of extinguishing a democratic regime in Hong Kong that posed no threat to Beijing’s assertions of sovereignty and so much benefited the broader Chinese economy.

Beijing shamelessly breaks international obligations whenever it suits its purposes knowing Western sanctions, such as denying CCP officials travel privileges, have a little bite.

What Biden gets right

Biden is correct to identify semiconductor design, fabrication and software know-how as critical to Western prosperity and security. Best-in-class methods and dominant market shares for the 300 or so components, processes, tools and chemicals are broadly distributed across the United States, Japan, Taiwan, Korea, Australia, India and several Western European nations.

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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

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