Domestic politics drive US trade policy

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US retreats from free trade | Korea as a semiconductor powerhouse | Wishful thinking? | More research from Hinrich Foundation

US retreats from free trade

Nippon Steel wants to acquire US Steel but the deal is encountering political headwinds. Sarah Baurele Danzman writing for the Atlantic Council says the deal is a test of friendshoring – and the US is failing. Alan Wm. Wolff of the Peterson Institute for International Economics asks whether the US government should be concerned about the acquisition. Richard Katz in Japan Economy Watch discusses hope for a deal between Nippon Steel and the United Steelworkers. Gavin Bade in Politico reports that Biden voices opposition to the deal.

Meanwhile, the US House of Representatives passed legislation to force the divestment of TikTok or ban it from US app stores. Eight experts debate whether TikTok’s time is finally up and the implications for US-China relations in Foreign Policy. Rana Foroohar in Financial Times declares shipbuilding as the next front in the US-China trade war.

Andrew Duehren in The Wall Street Journal sees the US retreating further from a free trade consensus with these developments.

Mentioned publications

1. The US Steel deal is a test of friendshoring—and the US is failing – Sarah Bauerle Danzman, Atlantic Council, January 8, 2024
   US Steel stands to benefit from Nippon Steel’s acquisition, but will it go through?

2. Should the US government be concerned about Nippon Steel acquiring U.S. Steel? – Alan Wm. Wolff, Peterson Institute for International Economics, February 2, 2024
   Although a landmark case, is there any reasonable basis for concern about Nippon Steel’s acquisition?

3. Hope For A Deal between Nippon Steel and the Steelworkers Union Before Election Day – Richard Katz, Japan Economy Watch, February 27, 2024
   Could a deal between Nippon Steel and the United Steelworkers union save the acquisition?

4. Biden voices opposition to US Steel sale – Gavin Bade, Politico, March 13, 2024
   Will Biden’s statement doom Nippon Steel’s acquisition?

5. Is TikTok’s Time Finally Up? – China File Contributors, Foreign Policy, March 19, 2024
   Eight experts debate the national security and economic questions surrounding Congress’s move, and the prospects for divestment.

6. Shipbuilding: the new battleground in the US-China trade war – Rana Foroohar, Financial Times, March 13, 2024
   What is the importance of commercial shipbuilding capacity, and should countries like the US focus resources on maintaining shipbuilding capabilities?

7. On TikTok and Steel, U.S. Retreats Further From Free-Trade Consensus – Andrew Duehren, The Wall Street Journal, March 16, 2024
   The latest actions concerning TikTok and Nippon Steel indicate a deepening of American protectionism.

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Korea as a semiconductor powerhouse

Semiconductor production is a massive component of the Korean economy. How are geopolitical shifts shaping this industry? South Korean chip companies are halting sales of old equipment over US export control fears, reports the Financial Times. Alicia Garcia-Herrero in Bruegel notes the lessons Korea offers for Europe, and especially Germany. Hyung-gon Jeong for the Korea Institute for International Economic Policy offers the trade dynamics of Korea’s semiconductor industry.

Mentioned publications

1. South Korean chipmakers halt old equipment sales over fears of US backlash – Financial Times, March 12, 2024
   South Korean companies want to avoid running afoul of US export controls.

2. South Korea’s rollercoaster relations with China offer lessons for Europe – Alicia Garcia-Herrero, Bruegel, March 2024
   Korea’s adjustments vis a vis China could offer a good example for Germany and other EU economies.

3. Analyzing South Korea’s Semiconductor Industry: Trade Dynamics and Global Position – Hyung-gon Jeong, Korea Institute for International Economic Policy, March 14, 2024
   What is the importance of semiconductor manufacturing to the Korean economy?

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Wishful thinking?

Are supply chains really "de-risking"? The European Union Chamber of Commerce in China and the China Macro Group examine the politics of economic security, looking at actions by the EU, China, and the US. Russia is pivoting to its south to increase trade flows and avoid sanctions, per the New York Times. Brad Setser and Michael Weilandt of the Council on Foreign Relations take a look at China’s record manufacturing surplus.

Mentioned publications

1. Riskful Thinking: Navigating the Politics of Economic Security - European Union Chamber of Commerce in China and China Macro Group, March 20, 2024
   A review of the steps EU, China, and the US are taking to "de-risk" each economy.

2. From Moscow to Mumbai: Russia Pivots South for Trade – Ivan Nechepurenko, The New York Times, March 13, 2024
   Russia is establishing more robust trade lines to the south to compensate for lost trade ties with Europe.

3. China’s Record Manufacturing Surplus – Brad Setser and Michael Weilandt, Council on Foreign Relations, March 10, 2024
   Despite de-risking, China’s manufacturing remains dominant and deserving of greater attention from policymakers.

More related analysis from HF:

• The return to trade protectionism
• De-risking semiconductor supply chains
• The world’s factory strikes back

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