Joe Biden Is Driving Inflation
Published in Frankfurter Allgemeine Zeitung
(Germany) on 20 May 2024
by Alexander Wulfers (link to original)
(Germany) on 20 May 2024
by Alexander Wulfers (link to original)
Translated from
by Michael Stehle.
Edited by Laurence Bouvard.
Joe Biden is imposing tariffs on imports from China. Now, it is clear that no one is as responsible for inflation in the United States as the president himself.
Probably the most important legislative package of Joe Biden’s term bears the pretty title Inflation Reduction Act. It will not br without a certain irony if the president’s political legacy is eventually associated with this particular term. Not just because the law, with its subsidies for green technologies, will have achieved much for climate action, but precious little for combating inflation. Since Biden announced enormous tariffs on Chinese imports this week, it can now be said that no one else has contributed as much to the rise of inflation in the United States in the past four years as Biden, who is possibly a world champion in this discipline.
It started as early as the beginning of his term with the major economic package Biden used to combat the economic impacts of the pandemic. The American government paid out $1.9 trillion. With this money, demand grew for goods and services that could not be supplied in such quantities. So prices rose — and America suffered inflation entirely without the European energy crisis. Economists ascribe almost three percentage points of that to Biden’s generous fiscal policy. The president would not be deterred. Shortly before the 2022 Congressional elections, he announced that millions of Americans would have $10,000 of their student debt forgiven. Inflation was at 8% at that point. Only the Supreme Court was able to prevent this measure.
Consumers Will Pay the Price
In recent weeks, Biden has explained his plans for housing policy on social media platform X. Anyone who buys a house or an apartment, Biden writes, will receive $400 a month for two years. It’s clear at this point that greater demand with unchanging supply is the fastest way to drive up prices.
And now, another new trade conflict is brewing. While inflation in the United States persistently stays above 3%, Biden is pushing forward with an idea that will once more make the lives of Americans more expensive. A 50% tariff will soon be due on Chinese semiconductor imports into the United States, 100% on Chinese electric cars. Solar cells, which are so important for the energy transition, will also be taxed at 50%, as well as lithium ion batteries at 5% along with steel and aluminum products. It is little consolation that Biden’s opponent Donald Trump would prefer to double the tariffs.
The list makes clear that more than a small part of the American economy will be affected. Semiconductors are found in almost every product these days. At the height of the pandemic, the chip shortage kept the world in suspense and was partly responsible for high prices, from cars to PlayStations. Steel and aluminum are also indispensable materials.
The new tariffs are nothing more than a tax hike on imports. In the end, American consumers will pay for it, just as the tariffs of Biden’s predecessor Trump were reflected in higher prices.
And it's not just Chinese imports that will become more expensive. That’s not how pricing works. Producers who don’t have to pay any tariffs, European electric car manufacturers for example, will exploit the lack of competition. The losers are American consumers.
As a European, you cannot be indifferent to all this. In the footsteps of the Americans, the EU Commission is planning its own tariffs on Chinese electric cars — with similar effects on car prices to be expected. A new trade war looms in the face of anticipated retaliation by the Chinese, another unraveling of globalization, and higher prices this side of the Atlantic will come with it. The one responsible for this is first and foremost Biden, the protectionist.
Probably the most important legislative package of Joe Biden’s term bears the pretty title Inflation Reduction Act. It will not br without a certain irony if the president’s political legacy is eventually associated with this particular term. Not just because the law, with its subsidies for green technologies, will have achieved much for climate action, but precious little for combating inflation. Since Biden announced enormous tariffs on Chinese imports this week, it can now be said that no one else has contributed as much to the rise of inflation in the United States in the past four years as Biden, who is possibly a world champion in this discipline.
It started as early as the beginning of his term with the major economic package Biden used to combat the economic impacts of the pandemic. The American government paid out $1.9 trillion. With this money, demand grew for goods and services that could not be supplied in such quantities. So prices rose — and America suffered inflation entirely without the European energy crisis. Economists ascribe almost three percentage points of that to Biden’s generous fiscal policy. The president would not be deterred. Shortly before the 2022 Congressional elections, he announced that millions of Americans would have $10,000 of their student debt forgiven. Inflation was at 8% at that point. Only the Supreme Court was able to prevent this measure.
Consumers Will Pay the Price
In recent weeks, Biden has explained his plans for housing policy on social media platform X. Anyone who buys a house or an apartment, Biden writes, will receive $400 a month for two years. It’s clear at this point that greater demand with unchanging supply is the fastest way to drive up prices.
And now, another new trade conflict is brewing. While inflation in the United States persistently stays above 3%, Biden is pushing forward with an idea that will once more make the lives of Americans more expensive. A 50% tariff will soon be due on Chinese semiconductor imports into the United States, 100% on Chinese electric cars. Solar cells, which are so important for the energy transition, will also be taxed at 50%, as well as lithium ion batteries at 5% along with steel and aluminum products. It is little consolation that Biden’s opponent Donald Trump would prefer to double the tariffs.
The list makes clear that more than a small part of the American economy will be affected. Semiconductors are found in almost every product these days. At the height of the pandemic, the chip shortage kept the world in suspense and was partly responsible for high prices, from cars to PlayStations. Steel and aluminum are also indispensable materials.
The new tariffs are nothing more than a tax hike on imports. In the end, American consumers will pay for it, just as the tariffs of Biden’s predecessor Trump were reflected in higher prices.
And it's not just Chinese imports that will become more expensive. That’s not how pricing works. Producers who don’t have to pay any tariffs, European electric car manufacturers for example, will exploit the lack of competition. The losers are American consumers.
As a European, you cannot be indifferent to all this. In the footsteps of the Americans, the EU Commission is planning its own tariffs on Chinese electric cars — with similar effects on car prices to be expected. A new trade war looms in the face of anticipated retaliation by the Chinese, another unraveling of globalization, and higher prices this side of the Atlantic will come with it. The one responsible for this is first and foremost Biden, the protectionist.
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