As America moves towards protectionist trade policies, this is how it will affect you

For much of the twentieth century, the United States has been a nation pushing ideals of free trade and globalization. 

But a recent shift in trade policy towards American protectionism is changing the global economic landscape and it’s going to seriously affect you. 

For decades, U.S. trade policy was based on the idea of working to remove the foreign subsidies that harmed American workers and exporters according to an article from the Economist. 

But in recent years, both Republican and Democratic politicians have been developing policies that scrapped the old ideas of trying to get other countries to eliminate their subsidies and instead have moved towards helping build America’s own. 

“Rather than trying to get other countries to cut subsidies,” the Economist article noted, “the Biden administration’s unabashed focus is on building a subsidy architecture of its own, complete with the kinds of local-content rules that American officials once railed against.”

The Biden administration took its first steps towards protecting key American industries early this year with the Chips and Science Act, which provided 52.7 billion for America’s semiconductor industry. 

At first glance the decision made sense. Semiconductors and the research involved in producing them more efficiently and at scale is a key defense priority of the utmost national security. 

Regulations buried in the bill block Chinese firms from developing advanced chip sand and also prohibited American citizens and companies from assisting China’s semiconductor industry according to The Atlantic’s Erik Carter. 

“These controls mark a distinct shift in Washington’s approach to China,” Carter noted, “Washington is now purposely and openly working to hold back Chinese economic progress.”

But it isn’t just industries of grave national importance that are seeing more subsidies from the American government. 

America’s most important regional partner and closest ally Canada has been suffering greatly from its southern neighbor's gradual slide into protectionism.

“The difficulty, at a broader level, is the relationship between Canada and the U.S. has gone from being a strategic relationship where we see each other as critical partners to each other to being one that’s transactional,” Canadian Chamber of Commerce CEO Perrin Beatty told the Calgary Herald before the September 23rd Global Business Forum in Banff.

Under former President Donald Trump, greater trade protections were put in place that hurt Canada according to Geoffrey Gertz of Brookings. 

“His administration justified these policies on three grounds: that they would benefit American workers, especially in manufacturing; that they would give the United States leverage to renegotiate trade agreements with other countries; and that they were necessary to protect American national security,” Gertz wrote. 

But it was just Canada that was affected noted Gertz. China, Mexico, the European Union, and several of the United States’ other trading partners suffered from Trump's decisions to protect American workers and businesses. 

The change in American trade policy didn’t end when Trump was voted out either. The Biden administration has continued Trump’s protectionist policy and doubled down. 

A good example can be found in the green-tech subsidies added to Biden’s Inflation Reduction Act in 2022. 

“Trade experts in Europe raised the alarm that America’s subsidies spell trouble for the continent’s green-tech ambitions,” the Economist article explained. 

In December, French President Emmanuel Macron call the Inflation Reduction Act a “killer for our industry,” in a 60 Minutes interview. 

America's Asian trade partners have also been vocal about the country's turn towards protectionism according to The Economist, especially Asia's businesses.

"The [Asian] chipmaking giants fret about breaking up networks of expertise in their most advanced manufacturing," The Economist noted, "and surrendering the technological leads that sustain their existence."

Simply put, America’s new turn towards protectionist policies means you’re going to suffer. Tit-for-tat tariff policies could make prices higher for goods in your country and could lead to trade wars that worsen your quality of life, even if you're American.