The United States is Finally Investing in Its Own Industries and the Davos Set Doesn’t Seem Happy About It

Billionaires and world leaders are gathering in Davos, Switzerland for the annual meeting of the World Economic Forum. America’s leaders are coming with a message.

There have been a tidal wave of investments that have taken place in American industries over the past several months, and many of them can be directly attributed to the passage of the Inflation Reduction Act (IRA). The fact that the IRA has already proven to be so successful in spurring factory investment has meant that you may have forgotten just what a massive surprise it was when it became law back in summer 2022.

And it all happened because of this guy:

O.K., that’s a little unfair, since many on Capitol Hill long backed the legislation and worked tirelessly to get it through. But it may not have ever become law had it not been for Sen. Joe Manchin (D-W. Va.), who struck that surprise deal with Senate Majority Leader Chuck Schumer (D-N.Y.) in July 2022. Manchin’s vote was so critical to the climate bill’s passage that President Biden gave him the pen he used to sign it into law, and the West Virginian has since become one of its top advocates.

And so this week, the motorcycle-riding, gas stove-loving, coal country native is in Davos, Switzerland, hanging out with the elite of the elite of the elite. It’s the annual gathering of the World Economic Forum, in which billionaires, politicians, and even celebrities gather to discuss ways to solve the world’s problems.

It’s recently been panned as “out of touch” and “out of date,” but hey, a lot of important people still show up, so it’s worth watching.

Manchin is one of them, there to try to sell the IRA. However, it does not appear that the Davos set is all too pleased with him for being the guy who helped make the IRA law. After all, a lot of these folks made their fortunes via unchecked globalization and unfettered trade, and are concerned that the incentives in the IRA for American-made products, including when it comes to electric vehicles, may impact their bottom line.

The European Union in particular has been complaining about the EV incentives for awhile, so it shouldn’t have come as much of a surprise that when Manchin met with German Chancellor Olaf Scholz, the conversation was tense, with Scholz saying it will harm Germany’s automakers. Manchin recalled to Politico:

Manchin pushed back, saying there’s nothing stopping Germany from producing more cars in the United States — a point that wasn’t exactly a response to Scholz’s frustration.

“I think it rubs him wrong when I say that,” the senator told POLITICO.

Manchin said that Scholz countered that the U.S. places too many penalties on European cars entering the American market. So the West Virginian pulled out his cellphone and Googled “tariff cost on autos in Germany.” In bold, the search engine’s front page excerpted the relevant part of a 2019 Deutsche Welle article: “US levies a 2.5 percent tariff on European auto imports, while the European Union imposes a 10 percent duty.”

As Liam Donovan pointed out on Twitter, what a great anecdote for a Manchin campaign ad!

Manchin’s not the only one who is sharing a needed message with the Davos set. U.S. Trade Representative Katherine Tai spoke on a panel at Davos on Wednesday in which she called for a new global trading system, noting that the globalization of the past several decades is no longer working.

“Rising inequality in many different economies is driving a desire on our part to lead the conversation and to lead the thinking around what a new version of globalization might be — what a new economic world order might look like,” Tai said.

Tai added that events like COVID-19 and the war in Ukraine have led the Biden administration to make sure not to “lose sight of those who we want to benefit from our vision.” Politico Morning Trade noted that Tai made sure to point out that “those people are workers, and not the executives assembled at Davos.”

Here’s more:

She hammered home the point by touting the Biden administration’s close alliance with organized labor — the traditional adversary of the management class at Davos — and saying that her appearances before two large American labor unions (and pointedly not their bosses) have been the highlights of her career.

The speeches before the AFL-CIO and United Steelworkers are part of what “distinguishes me from my predecessors,” Tai said, recalling her keynote before the USW convention.

“There’s a different energy in the room than here at the WEF,” she said wryly, “but also an incredibly important audience for our vision for trade.”

Tai’s remarks really get at the heart of what is behind much of the freakout over the IRA, because on its own, the new law isn’t the massive threat the Europeans are making it out to be. Don’t take my word for it; the German Economic Institute called EU criticism “both self-righteous and exaggerated,” especially since the EU has long encouraged the United States to do more on climate and now is whining when the United States is doing more on climate.

What’s actually happening is that the United States — still the most powerful democracy in the world, still home to the biggest economy in the world — is shifting the way it does business on trade. And its placing a lot more importance on ensuring it can make the things it needs in the United States.

The shift began under former President Donald Trump, but many thought that was just an aberration and things would return to the old status quo once Biden took office. After all, Trump was a bit uncouth and a total blowhard. Surely Joe Biden, a guy who has been in politics since the 1970s, would get things back to normal!

That didn’t happen, though. There are a lot of reasons why, including the long overdue realization that China’s two decades of trade cheating essentially broke the world’s trading system and a shift in U.S.-China relations is needed.

Then there were the supply shortages from the COVID-19 pandemic and war in Ukraine, which led policymakers to begin to invest to encourage the reshoring, or at least near-shoring, of critical production. Plus, Scranton native Biden voiced his support for policies like Buy America and other efforts to bring factory jobs home.

Instead of continuing to criticize U.S. efforts to strengthen its critical clean energy and electric vehicle manufacturing base, EU leaders and others in Davos would be better served by investing in their own production. They’d likely find support from their own workers, as Tai did when she met with European trade union representatives during her Davos trip.

“Luc Triangle, general secretary of IndustriAll Europe, praised the IRA approach of ‘investing in clean energy products and supply chains, and closely link this investment to a worker-centred decent jobs agenda,'” Euractiv reports. “‘In this sense, the IRA is inspiring,’ he said in a statement.”