David Green is Chairman of Civitas.
The age of unfettered globalism is over and the era of national economic self-help is dawning, but where do the two candidates for the Tory leadership stand on the defining issue of our time?
Regardless of who wins the US election there will be big changes in America’s relationship with China. The Republicans call their approach ‘decoupling’ while the Democrats prefer ‘derisking’. Imposing tariffs on Chinese imports has been a prominent part of the campaign, with both candidates supporting high tariffs.
The Republican 2024 election platform contends that prosperity in recent years has not been sufficiently shared and is worried that America is losing ground to an authoritarian dictatorship. It accuses American politicians of selling American jobs through unfair trade deals and ‘blind faith in the siren song of globalism’.
The US needs to revive its defence industrial base, promote emerging industries, and establish the US as a manufacturing superpower. Critical supply chains should be brought home and China should be prevented from buying American property and industries. In particular, the party promises in capital letters to ‘DRILL, BABY, DRILL’ to make America energy independent.
The Democrat’s 2024 platform also wants to bring home supply chains, and Joe Biden passed the CHIPS and Science Act to restore America’s dominant role in semiconductors. Biden strengthened ‘buy America’ rules and not only retained most of the Trump tariffs on Chinese goods but also imposed some additional tariffs, including 100 per cent on Chinese electric vehicles, 50 per cent on solar cells, and 25 per cent on steel and aluminium.
However, the Democrats are against Donald Trump’s proposed ten per cent tariff on all imports and his planned 60 per cent on Chinese goods.
Both parties accept that tariffs will mean that consumers will probably have to pay more in the short term, but argue that it is worth it to protect jobs and encourage reshoring of manufacturing. People are not just consumers, but also producers. If a choice must be made, then well-paid jobs come before low prices.
The Republican Party, in particular, has undergone a radical transformation. Once the party of unfettered free markets and globalism, it is now the party of national self-help. There is a bit of an echo in our Conservative Party, but the new American thinking has not been prominent in the leadership contest. Before all votes are cast it would be useful to know where the candidates stand.
America’s change of heart has been driven by two main realisations. First, that the West faces an existential threat from an alliance of authoritarian dictatorships led by China.
Second, that the globalist belief in buying goods at the lowest world price does not increase prosperity for all if the lower prices are the result of state subsidies, suppression of wages, ignoring health and safety regulations, industrial espionage, and currency manipulation.
The underlying conception of a free market is a fair fight to discover who can meet the needs of customers most efficiently, without cheating. The new mercantilism of China is a corruption of the ideal of economic freedom. Beijing’s aim is to become the dominant power in the world both economically and militarily, and to use its power to impose its will on other peoples.
International trade is beneficial when there are mutual benefits, but there is no reciprocity in China’s approach. It aims to gain one-sided advantage at the expense of other nations.
Both Tory leadership candidates advocate building up our military defences, but on the dispute between globalism and national self-help their views remain unclear. Do they support decoupling from China? Are tariffs necessary to combat unfair Chinese subsidies? Should we prevent Chinese companies from buying up more of our industries?
