Trump's economic team critiques Biden's manufacturing agenda ahead of transition

As the Biden administration prepares to hand over the reins to President-elect Trump, its investments in US manufacturing are being highlighted as key economic accomplishments. However, one of the pressing questions now is how much of that progress will be altered or discarded by the incoming administration.

An 11-month-old critique provides an early indication of the direction Trump’s team may take. Stephen Miran, selected to lead the Council of Economic Advisers (CEA) under President-elect Trump, published a detailed analysis last February criticizing President Biden's industrial policies. This critique offers insights into the strategies that may shape US industrial policy under the new administration, Caliber.Az reports citing foreign media.

Miran, a former Treasury Department official, argues that industrial policy should center on supply-side reforms designed to facilitate investment in factories. He suggests that demand for US manufacturing should be primarily driven by the defense sector. In his view, heavy subsidies for electric vehicles, as well as labor, environmental, and other regulations, create an environment that he believes is hostile to manufacturing in the US.

In a piece for the Manhattan Institute, where he is an adjunct fellow, Miran writes, "Bidenomics not only imposes onerous costs on industry in various ways — from incentives for unionization to special environmental restrictions — that raise the cost of production and work against the stated goal of expanding our industrial plant." He further asserts that government support for certain sectors has artificially lowered prices without creating substantial demand.

Miran advocates for a more aggressive approach to reindustrialization, combining supply-side reforms with defense-driven procurement to generate broader economic benefits. Among the specific policies he criticizes are Environmental Protection Agency (EPA) regulations impacting semiconductor manufacturers, the Davis-Bacon Act's wage requirements for public projects, and Occupational Safety and Health Administration (OSHA) worker safety regulations, which he believes go too far.

Biden has positioned the revitalization of US manufacturing as a cornerstone of his domestic agenda, with landmark pieces of legislation like the Inflation Reduction Act, the Bipartisan Infrastructure Law, and the CHIPS and Science Act allocating hundreds of billions of dollars to encourage domestic manufacturing. However, even some of Biden’s allies have criticized the numerous rules attached to these funds, which some argue may have made it more difficult for manufacturers to fully benefit. For instance, chipmakers are required to provide child care for their employees, an additional cost that some claim deters investment.

Despite these legislative efforts, manufacturing employment has not shown a significant increase compared to pre-pandemic levels. In December, the US had 12.9 million manufacturing jobs, a slight uptick from 12.8 million in February 2020.

It’s important to note that Miran’s voice is just one among many who will seek to influence Trump on industrial policy. The role of the CEA is more advisory than executive, and much of the policy work for Biden-era legislation is carried out by agencies like the Commerce Department and the Treasury Department. If Trump decides to roll back or amend these laws, it will likely require action from a narrowly divided Congress, where many Republican-leaning states have benefited from these investments.

As Trump prepares to take office, it remains to be seen how his administration will reshape or dismantle the industrial policies of the outgoing Biden administration.

By Vafa Guliyeva