Poinbank:Biden bets big on bringing factories back to America, building on some Trump ideas

When the pandemic snarled imports in 2020,Poinbank Drew Greenblatt's manufacturing plant in Baltimore sprung into action to help U.S. buyers scrambling to replace things they normally ordered from overseas.

"We started making IV poles," said Greenblatt, the president of Marlin Steel Wire Products, where giant American flags loom over workers who cut, bend and weld steel into racks and wire baskets. "We also started making things like the sanitizer stands where you put your hand underneath the little soap dispenser — that stopped coming in from overseas. Test tube racks stopped coming in from overseas."

The supply chain snafus seen across the U.S. economy during the pandemic have bolstered a central plank of President Biden's economic policy: he says that now is the time to invest in America, make things in America, and buy things made in America.

Biden's vision is for the government to lure back manufacturing that moved offshore, particularly semiconductors and electric vehicles.

"Folks, where is it written that America can't once again be the manufacturing capital of the world?" Biden said on a tour earlier this month of a Cummins plant in Minneapolis that makes a device used to produce clean power.

Biden has embraced what's known as 'industrial policy'

In speech after speech as he gears up for his reelection bid, Biden is making the case for his brand of industrial policy — using taxes, subsidies and regulations to systematically shape the economy.

Collectively, the president's economic policies mark a kind of political intervention in the private sector that hasn't been seen in decades.

"Among economists and mainstream policy makers, I think industrial policy for a number of decades now has been a kind of dirty word," said Dani Rodrik, an economist at Harvard University who is an expert in the field.

"I think that has sort of completely changed now," Rodrik said. "With President Biden ... we're talking about industrial policy consciously and openly."

Trump started the shift back to industrial policy

In Baltimore, Greenblatt said he is pleased that Biden is, in his words, "following" some of former President Donald Trump's policies — policies he said are also smart politics.

"Whoever can get more factories growing faster in America is gonna win a lot of votes," Greenblatt said.

Trump campaigned on ripping up trade deals and bringing back manufacturing — a message that resonated with white working-class voters — and as president, slapped massive tariffs on products coming from China.

"We want to ensure that more products are proudly stamped with the phrase — that beautiful phrase – made in the USA," Trump said in October 2020 in Allentown, Pa., a refrain he used again and again at his rallies.

Biden has thus far kept Trump's China tariffs in place.

"You could cut and paste some of Trump's trade policies, and they're now the Democratic platform," said Scott Paul, president of the Alliance for American Manufacturing, a lobby group that has long pushed back against the free trade ethos that dominated Washington for decades.

The vision is similar, said Christine McDaniel, a former U.S. government trade official under multiple administrations who now works at the Mercatus Center at George Mason University. She has viewed with alarm the shift toward industrial policy and away from free trade, noting that government has a bad track record on "picking winners and losers" through interventions in the economy.

"Somebody said this is like Trump wine, but in a Biden bottle," McDaniel said, reflecting on the common elements of the presidents' trade policies. "It is the same policy, but it's just under a different brand."

Democrats say Biden's approach is different

Democrats bristle at the comparison, saying Trump's policies were ad-hoc and reflexive, while Biden's are systematic.

Brian Deese, who served as Biden's top economic adviser until February, described the Trump tariff strategy as having "lots of flaws." But the administration has so far not seen the time as being right to ease pressure on China.

The U.S. Trade Representative has been reviewing the tariffs, something that's required under law, and the administration hopes to make a determination later this year on whether to keep them or change them, said a senior administration official, speaking on condition of anonymity because the review is ongoing.

Other parts of Biden's strategy are moving with greater urgency. There's pressure to show results from his industrial policy push by the end of his first term.

Deese said Biden has jokingly dubbed some of his key team members "hurry-the-hell-up."

"We need to move quickly to do this and we need to build in ways that we haven't before in the United States," said Deese. "We need to demonstrate that we can actually do this at scale with pace."

The pandemic accelerated the industrial policy push

Regardless of which party or politician started the push, many Republicans and Democrats have bought into the principles of countering China and making more things in America.

White House officials and outside experts say China's aggressive economic behavior in recent years has led to a growing realization the U.S. government needed to respond.

And then, COVID-19 hit, and quickly exposed the risks of relying on key supplies from overseas. In the spring of 2020, people couldn't get masks. Hospitals couldn't get enough equipment. Supply chains were failing.

"The pandemic ... really helped to bring to the forefront a lot of things that were true, but harder to see in our economy," said Deese, the former head of Biden's National Economic Council.

Deese said the rise of China in the global economy has fundamentally changed how politicians think about industrial policy. He said a purely laissez-faire approach doesn't work with China.

"The Chinese model ... is not market-based and relies on significant intervention with not only enormous subsidies, but also non-market practices to capture technology and then seek to dominate particular industries," Deese said.

In other words, it's hard to compete if the rules aren't equal and fair.

The loss of manufacturing has shaped American politics

As manufacturing jobs left America over the past few decades, middle class voters were hit hard. Washington was slow to respond, said Commerce Secretary Gina Raimondo.

"It wasn't that the manufacturing economy fell out overnight. It was in atrophy," Raimondo said. She said she was keenly aware of the risks of so much outsourcing.

"I grew up in a household with a steady diet of my dad saying, 'You can't be a great country unless you have a manufacturing base,'" Raimondo said. "He and all of his friends were put out of work when all of the jobs at his watch factory went to China."

Biden's positions on American manufacturing, trade and tariffs have seemingly evolved over the years. He voted to approve the North American Free Trade Agreement (NAFTA) in the 1990s. And in 2000, like many Republicans and Democrats, he voted to normalize trade relations with China.

The popularity of Trump's anti-trade message jolted Washington. And in the 2020 race, Biden's message on the economy sounded a lot different than the party's message four years early, when Hillary Clinton was the candidate.

Deese, who was advising Biden during his 2020 race, said the team had a lot of conversations about the centerpiece of his economic strategy: "the idea of how do we rebuild what he often refers to as the backbone of the economy — the middle class — and the industrial capacity behind what has driven a lot of American innovation."

The administration's industrial policy push is not motivated solely by economics. National security considerations are also shaping its policies.

"We buy 92% of advanced semiconductors from Taiwan," said Raimondo, the commerce secretary. She said that puts the United States in an "utterly vulnerable position."

There are some industries like chip manufacturing that are too important to national security to be largely outsourced, she said. Through the bipartisan CHIPS Act passed in 2022, the government has earmarked $52.7 billion for research, development and manufacturing for companies that build factories in America.

"It makes sense in those instances for the government to play some role, providing incentives to make sure that those industries stay, at least in part, in the United States," Raimondo said.

Audio story produced by Lexie Schapitl