Can US industrial trade policy stay on course?

Bianchi builds the history out of a grievance rather than a policy. The trade settlement she reaches back for, the North American trade agreement and China’s admission to the world trading system, coincided with a globalization that left part of the country hollowed out. That undercurrent found its moment when Trump took up tariffs and called into question a bipartisan free-trade project that had run as far as the Transpacific Partnership at the end of the Obama administration, and the pandemic then taught everyone what a vulnerable supply chain costs. Her account of the result is deliberately symmetric: Biden and Trump are very different and arrived at the same instinct to build it here, expressed through different tools. For Biden it was incentives and the Inflation Reduction Act; for Trump it is tariffs, equity stakes in companies and price floors. Either way, she says, it is here to stay. The scope she keeps attached matters. The agreement covers certain things, built here or with partners and allies where that is not possible, and she is explicit that there is not agreement on everything.

The tariff path illustrates her durability point, and it cuts against the hope behind the question rather than for it. She expects the administration to get back as close as it can to where it stood before the Supreme Court ruled against it, and credits its own read that the predicted inflation and disruption did not really materialize to the degree expected. Mechanically that means a global 10% tariff under Section 122, expiring in mid-July, bridging to a batch of Section 301 investigations that should be ready by then. Her forecast is a landing in the low to mid-teens as a weighted average, against about 2% when the administration started, with tweaks such as exempting food along the way. The part that answers the title is her aside that this will be a lot harder for the next administration to unwind than it might think.

Where the course does break is in the rules underneath, and she reports that from the allies’ side. Korea and Japan invested around the Inflation Reduction Act, waited longer than they wanted for the rules, then saw accommodations that cut against them anyway; her example is the Biden administration exempting graphite from the minerals rules when certain Korean companies can make graphite. The tariff-driven investment vehicles carry their own version: a trading partner receives a proposal and has 30 days to say yes or no, which she says is not something any trading partner would like. A second sentence, garbled in the transcript, adds that it does not feel like the equilibrium. She thinks the first round of Japanese deals broadly passes the test of being investments the country would want to make anyway, while adding that she has not pressure-tested each one, and she expects friction as the political need to cut ribbons meets project timelines. Her rule for which industrial policy survives is that it needs a clear security connection, as with chips, plus realism about what the country can catch up on; she raises shipbuilding as a case where the honest answer might be a different kind of partnership. She also argues the Inflation Reduction Act probably would have been a bit more durable if it had been sold on AI, energy and data centers, though she allows it may have been too early in that moment, and that making electric vehicles its centerpiece let Republicans make fun of it.

Critical minerals are where she is least optimistic, on economic rather than political grounds. You have to go mineral by mineral. There is lithium in the United States and promising extraction technology, but processing remains the gap. Johnson adds that the international lithium price has cratered as China brought more to the market; her own version is narrower and hedged, that when the main supplier, at least of processing, is willing to flood the market you have to work out what to do about it. Her recurring target is the belief that like-minded countries can solve this by agreeing to cooperate: she points to the Biden-era attempt at a global arrangement on steel that went nowhere because everyone had their own interests, and says even allies are hard to negotiate with. What is actually required is deciding who pays the higher price, which is why she credits the current administration for price floors and direct intervention and notes that some Biden alumni have said the same. That realism produces her bear case when Johnson asks for one. Even if this thing were clipped by 20 or 30%, she says, a great deal of investment still has to happen, so she cannot make a bear case on manufacturing and energy; the exception is projects needing heavy permitting and long-term capital, where an investor faces both a long wait and a price that could land anywhere between 1 and 100 times. Layered on top is her warning that politics has not finished with AI. She tells market participants that today is the peak of supportive government, that the backlash is already showing up in the states, and that she does not think anybody in Washington is quite prepared for it. Her own examples of who occupies that lane sit on the right; it is Johnson who expects candidates on both sides to take it up.