Biden has ambitious infrastructure goals. Made-in-America rules could slow them.

“The $1 trillion infrastructure law passed last year expanded Buy America rules, which require state and local agencies to buy certain materials made in the United States for federally funded infrastructure projects. Rules that iron, steel, and manufactured products be made in America have been in place for decades, but they’ve traditionally applied to transportation and water-related projects, such as highways, rail, and public transit.
The Infrastructure Investment and Jobs Act’s new rules broadened the scope of goods that have to be produced in the United States by creating a new category for “construction materials.” It also expanded the types of infrastructure projects subject to the requirements to permanently include housing, broadband, and new programs for electric vehicle charging projects for the first time.”

“many state and local officials across the country say the new rules could delay much-needed infrastructure projects and significantly drive up costs amid the fastest inflation in 40 years. Some say they’re already struggling to deal with supply-chain disruptions that have emerged during the pandemic and worry that material shortages could worsen if they’re limited to domestic manufacturers. Higher costs could also lead to fewer projects and soften the impact of the package”

Biden’s New Industrial Policy Will Fail, Just Like Industrial Policy Always Fails

“When it was passed, the law provided subsidies for the construction of a domestic shipping industry, while imposing various employment rules and other shipping regulations. It has been amended in the century since, but it continues to prohibit foreign-flagged ships from traveling between U.S. ports, and many of its wage and labor regulations are still in effect, making it beloved, almost obsessively, by unions.
In at least one way, the Jones Act has served at least part of its intended purpose: It has benefited the domestic shipping industry by shielding it from foreign competition. But it has done so at considerable expense to everyone else.

By restricting and regulating shipping at America’s ports, the Jones Act considerably raises the costs of transporting goods, which in turn raises prices on everything from food to electronics to textiles. In good economic times, the Jones Act is a cost borne by the majority to bolster the fortunes of a few. In periods of global economic instability and high inflation, the Jones Act makes supply chain problems worse and drives prices even higher. On a daily basis, it is a force for impoverishment. ”

“Just about any time one finds a politician taking credit for specific business decisions by specific companies, one ought to be skeptical, worried, or both. In this case, the proximate cause of much of Biden’s factory-jobs campaigning is the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, a $52 billion package of industry subsidies Biden signed into law in August. Manufacturers who stand to benefit from these subsidies have played along, with Micron’s leadership saying that its facility is “the first of Micron’s multiple planned U.S. investments following the passage of the CHIPS and Science Act.” Micron, however, was publicly teasing the possibility of new manufacturing facilities as early as October 2021, long before the CHIPS Act became law.”

“Just as the Jones Act ends up distorting the shipping industry, shaping it in ways that make it less flexible and less responsive to genuine consumer demand, we should expect the CHIPS Act to push the semiconductor industry into labor and production decisions intended to satisfy politically determined subsidy requirements rather than genuine market needs. Subsidies are more likely to incentivize inefficiency and dysfunction than genuinely useful production, inflating prices in the process. When subsidies are driving decisions, that means subsidy programs, not end users, are the true customer. “

My Baby Needed Special Formula From Europe. U.S. Trade Policy Made It Almost Unobtainable.

“My son was born with severe heartburn and cried constantly—and the baby formula on the shelves only caused him more pain. At the suggestion of our pediatrician, we turned to a European goat milk formula that we hoped could soothe my son’s stomach until he grew out of his condition. But recently our orders were canceled, thanks to the Food and Drug Administration (FDA).

America’s baby formulas are incredibly standardized. The FDA claims that that’s safer, but those regulations mean that most formulas have multiple ingredients that could be allergens or irritants. Milk-based formulas in the U.S. also have soy ingredients like soy oil, as well as palm oil. And most American formulas have higher than average levels of iron, which can cause constipation. While many European brands are similar to American ones, you can find brands there that don’t contain so many possible irritants to a child’s sensitive stomach. We used Nannycare, and my son found it much more tolerable than its stateside competitors.

It’s impossible to say for sure why my English supplier suddenly decided not to sell formulas to a buyer in the U.S. But the timing of the cancellation provides a clue: It happened shortly after the FDA blocked a large amount of European formula from being sold, declaring that they did not meet the agency’s standards.

We are far from the only family that relies on European baby formula. Yet the free flow of perfectly safe goods into the United States is still extremely restricted. The agency’s strict rules about how formulas can be made limit options for children with medical issues and leaves parents with products that can cause their little ones pain.

Worse yet, these regulations are more driven by bureaucratic and political interests than by science. These products, after all, have not caused a wave of problems for European babies.”

How Trump’s Tariffs on Chinese Chemical Products Backfired

“When the Trump administration implemented tariffs on Chinese chemical companies in 2018, administration officials said tariffs would make American chemical companies more competitive. But industry groups told regulators last week that it’s had the opposite effect.

At a Thursday hearing on the impact of the Trump administration’s tariffs against China, the American Chemistry Council (ACC), an industry group representing over 190 U.S. chemical companies, informed the International Trade Commission that imports of Chinese chemical products have instead grown continuously since the tariffs took effect in June 2018. Over $35 billion worth of chemicals were imported from China in 2021, and Chinese companies now make up a larger share of U.S. chemical imports than they did when former President Donald Trump took office in 2017.

Per the ACC, the Trump administration failed to account for American manufacturers’ reliance on intermediate products exclusively produced in China. “China is the primary source of many valuable inputs to U.S. chemical manufacturing processes, and for which few or no alternatives exist,” an ACC representative said. “It would take years, and billions of dollars, to build manufacturing capabilities for these inputs in the United States or other countries.”

Dyes stand out as some of the most notable examples of vital Chinese imports impacted by chemical tariffs. For U.S. manufacturers to produce Red 57, a red pigment commonly found in many cosmetic products, they must import 3-hydroxy-2-naphthoic acid, also known as BONA, from China. BONA is exclusively produced in China, forcing American manufacturers to bear the higher costs associated with importing these critical Chinese-made inputs for their final products.”

“Despite the attention given to the industry by the federal government in recent years, chemical companies are warning that tariffs are hurting their ability to invest new capital in their supply chains and innovate on issues like climate change. They also worry that it will slow job growth and hinder the Biden administration’s broader efforts toward restoring resilience in the supply chain while only contributing to higher costs for consumers.

“[T]ariffs are clearly not working for the chemicals and plastics sector,” the ACC said in their testimony. “[They] are making the United States a less attractive place for jobs, innovation, and plant expansion.””

Don’t Give U.S. Chipmakers a $76 Billion Government Handout

“The current legislation has swelled to a total cost of more than $400 billion. The core of the bill is $76 billion in direct funding for domestic semiconductor manufacturing through a variety of grants and tax credits. The rest of the money, beyond doubling the budget of the notoriously silly spenders at the National Science Foundation, is predictably a billion here and a billion there for vaguely named programs with even more ambiguous purposes. For example, as the Wall Street Journal editorial board pointed out, “The Commerce Department gets $11 billion, most of which it intends to plow into creating 20 new ‘regional technology hubs,’ which will somehow expand ‘U.S. innovation capacity.'””

“Proponents of the legislation would have you believe that the U.S. is overly reliant on foreign, unreliable suppliers of semiconductors, particularly those under threat from China. Semiconductors are unbelievably important components in practically countless goods relied on every day, but that’s no excuse to ignore the fact that the domestic semiconductor industry is, per a 2020 report by the Semiconductor Industry Association, “on solid footing.” U.S.-based semiconductor firms hold nearly half of the global market share, and 44 percent of that production already occurs in the U.S. Moreover, these figures don’t even capture firms based in allied countries such as South Korea and Taiwan that are currently spending billions of dollars to open semiconductor manufacturing facilities in the U.S.—without the need for funding.”

FDA Finally Admits It Caused the Baby Formula Shortage

“it’s the FDA’s unnecessary and protectionist rules that effectively ban foreign-made baby formula from being imported into the United States. On Wednesday, the agency announced plans to tweak those rules so foreign formula manufacturers can permanently import their goods into the U.S., giving American consumers greater choice in the marketplace and ensuring more robust supply chains.”

” When the Abbott Nutrition plant in Michigan was forced to close temporarily due to an FDA investigation into possible contamination, it created a supply shock that left store shelves empty and parents scrambling to find formula. Because of the FDA’s protectionist rules (and high tariffs levied on foreign-made formula), markets could not adapt quickly to the shortage here in America”

“In testimony to Congress, FDA officials admitted to botching the response to the contamination at the Abbott plant. But the real culprit of the recent shortage was a deeper and more pervasive one. No matter what nationalists like Sen. Josh Hawley (R–Mo.) might suggest, closing off the country to international trade is not a recipe for resilience. The baby formula crisis demonstrated that it is quite the opposite.
So it’s good to see the FDA admit those mistakes and crack open the door to allowing foreign formula into the U.S. on a permanent basis.

Unfortunately, the list of policy changes the FDA announced..mostly amounts to providing technical assistance to foreign firms that want to sell formula here. That is, offering help in navigating the complex approval process, rather than sweeping aside those regulations entirely. If a formula maker has passed muster under E.U. regulations, that should be good enough for the FDA.

There’s also the matter of tariffs on imported formula, which are so high that they effectively make any imported formula uncompetitive in the American market. Why would a foreign manufacturer like Holle or HiPP go through the complicated FDA approval process (even after the announced changes) if it knows in advance that its goods won’t be able to compete on a level playing field in America?”

Biden’s incredible shrinking infrastructure plan

“The inflation plaguing Joe Biden’s presidency is also shrinking what’s so far been his crowning legislative achievement — the infrastructure bill that Congress enacted just seven months ago.

Democrats have hailed the infrastructure law, with its $550 billion in new road, rail and broadband funding, as a transformative shift for the country. But inflation — which reached a 40-year high of 8.6 percent last month — has already slashed billions from its value, forcing states to cancel or delay projects as costs balloon.”

Sony loses millions after rejecting China’s demand to remove Statue of Liberty from new ‘Spider-Man’ film

“In China, films are reviewed by the China Film Administration under the Publicity Department of the Chinese Communist Party (CCP). Chinese authorities initially wanted Sony and Marvel Studios to take out the American landmark, which is prominently featured during the film’s third act, according to multiple sources.

Chinese regulators reportedly modified the original request to remove the action-packed sequence, instead asking for the removal of certain shots from the sequence that they deemed too “patriotic,” such as the scenes where Tom Holland’s Spider-Man stands on the Statue of Liberty’s crown. The regulators also suggested dimming the parts when the statue is shown to make it less noticeable.

Sony ultimately rejected the request, resulting in Chinese authorities preventing the latest Spider-Man film from being released in the biggest film market in the world. The film lost a potential $170 million-$340 million in sales from China, according to reports.”

How a Tiny Solar Company in California Might Convince Biden To Sabotage America’s Whole Solar Industry

“A tiny solar panel manufacturing firm with outsized political clout is poised to wreak havoc on the entire American solar energy industry.

And the White House, which at least theoretically supports expanding America’s green energy industries, might just go along with the madness. It’s a tricky situation for President Joe Biden to navigate, one that requires choosing between two of his top policy priorities: industrial protectionism and combatting climate change.

In February, the California-based company Auxin Solar submitted a petition to the U.S. Department of Commerce asking for a more expansive set of tariffs targeting imported solar panels and their component parts. The company alleges that American solar panel manufacturers are avoiding tariffs on Chinese-made solar panels and components—tariffs originally imposed in 2018 by the Trump administration but renewed earlier this year by Biden—by buying parts made in Cambodia, Malaysia, Thailand, and Vietnam that are sometimes made with Chinese parts.

That is, of course, pretty much exactly what you’d expect any company to do. But Auxin argues that the federal government now has a responsibility to stop what it calls attempts to “circumvent” those tariffs on Chinese imports by imposing new tariffs on imports from those four other countries as well. In March, the Commerce Department launched an investigation to determine whether those tariffs are to be added.

According to the Solar Energy Industries Association (SEIA), those prospective tariffs would target the source of about 80 percent of America’s supply of crystalline silicon photovoltaic cells, the fundamental building blocks of solar panels. In a letter to Commerce Secretary Gina Raimondo in March, dozens of the SEIA’s member companies warned that the tariffs would “stall both ongoing and planned U.S. solar projects and lead to the loss of over 45,000 American jobs, including 15,000 domestic solar manufacturing jobs.” It would also mean losing about 14 gigawatts of planned solar deployment—about two-thirds of the Energy Information Administration’s target for solar deployment this year

All that, the SEIA warned, “because a single company is seeking to inappropriately exploit the law for market advantage.”

It sounds like a typical story of big business using its political clout to shut smaller competitors out of the market. But the bizarre thing about this fight is that relatively unsuccessful businesses are holding the rest of the market hostage. Because they have friends in Washington”

“this offers a lesson about how protectionism creates perverse incentives in markets and politics. Trump’s decision to impose tariffs on Chinese solar parts and Biden’s decision to extend those tariffs have created a bizarre situation where a bankrupt solar manufacturer and an “artisanal solar boutique” might get to dictate the future of an entire industry.”

Taking Formula From Immigrant Babies Won’t Fix the Shortage

“Migrants in detention centers aren’t free to leave facilities whenever they want to shop for baby formula. Legally, essential products must be provided to migrant children that the government has detained. “Facilities will provide access to…drinking water and food as appropriate,” reads the 1997 Flores settlement that addressed the treatment of migrant children. A 2015 Customs and Border Patrol document on detention standards noted that “food must be appropriate for at-risk detainees’ age and capabilities (such as formula and baby food).” These legal standards predate the Biden administration.

Nor would diverting baby formula away from immigrant detention centers ease supply chain woes in a meaningful way. Ursula—the facility Cammack singled out on Twitter—holds around 1,100 detainees. The number of American parents who rely on formula to feed their infants is on the order of millions. Though several Republican lawmakers and right-leaning news outlets are agitating about the “pallets of baby formula for all of the illegals who are crossing into the United States,” none have been able to say exactly how much formula is going to detention facilities or how often shipments are arriving.

The baby formula shortage is indeed a huge problem. About 40 percent of top baby formula brands are out of stock right now, and producers are warning that shortages could last for several months. But the shortage wasn’t caused by the government’s legal duty to feed the kids it has confined. “Much of the current shortage is rooted in a February recall of formula after a suspected bacterial outbreak at an Abbott Nutrition plant in Michigan,” explains Reason’s Eric Boehm. And while we could re-fill those shelves with formula from abroad, tariffs and quotas “make it burdensome and costly to import the supplies that are now desperately needed.”

You can’t solve the national shortage by making it harder for undocumented parents to feed their babies. Instead of looking for immigrant scapegoats, lawmakers should tackle the trade and regulatory policies that helped create the current shortage.”