Janet Yellen's case against tariffs
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Treasury Secretary Janet Yellen. Photo: Brandon Bell/Getty Images
Treasury Secretary Janet Yellen will deliver a speech Thursday assailing broad-based tariffs. While her words implicitly target former President Trump, they also signify shifting intellectual currents within the Democratic Party.
Why it matters: If Vice President Kamala Harris wins the presidency next month, it's unclear whether she will share the inclination toward trade barriers of Trump and President Biden or listen more to the views of those in her orbit who advocate for using them sparingly.
- Yellen's comments stake out the position of those — including essentially all mainstream economists — who see trade as broadly beneficial for Americans and tariffs as an inflationary force that do more harm than good.
- That party wing has lost internal battles in the Biden years, as the administration kept Trump's broad-based China tariffs in place even when inflation spiked and has expanded them in targeted areas.
What they're saying: "Calls for walling America off with high tariffs on friends and competitors alike or by treating even our closest allies as transactional partners are deeply misguided," Yellen will say this afternoon at the Council on Foreign Relations, according to remarks obtained by Axios.
- "Sweeping, untargeted tariffs would raise prices for American families and make our businesses less competitive," she will add.
- "Trade expands the market for our exports, from services to goods like transportation equipment and electronics; helps our producers efficiently source key inputs; and enables American consumers to access more goods at lower prices," Yellen will say.
Between the lines: Harris' campaign focus on attracting moderate pro-business voters and her political identity from trade-heavy California offer reasons to think she could resist tariffs in ways Biden has not.
- Yellen's speech also appears aimed in part at fellow Democrats, making the affirmative case that trade creates economic benefits for American citizens and cements geopolitical ties with allies.
- Tellingly, Thursday's event is a fireside chat with Council on Foreign Relations president Michael Froman, who was former President Obama's trade envoy and recently published an essay critical of both the Trump and Biden administrations' uses of trade barriers.
Yes, but: Yellen will continue to defend the Biden team's use of targeted tariffs to try to combat China's heavy subsidies of products like electric vehicles, which they argue undermine the rest of the world's ability to compete in the industries that will drive the future.
- China's policies, Yellen will say, are "leading to industrial overcapacity in critical industries, threatening the viability of American and other firms and increasing the risk of over concentrated supply chains that undermine global economic resilience."
The bottom line: The Clinton-Obama era enthusiasm for free trade has been dormant in the Trump and Biden years, but its believers are not giving up.
