US industrial policy is not just transformative for the United States-but also for Asia, and intentionally so.
While governments with cash to spend-like members of the European Union-have pledged their own net-zero industrial plans and chips subsidies, Asian leaders, like Indonesian President Joko Widodo, have hinted at trade remedies to protect Asia’s budding electric vehicle industry against unfair market practices abroad. Understandably, there is some consternation over the market-distorting effects of Washington offering Beijing-style direct subsidies for those willing to bet on the Democrats’ ‘Make It in America’ agenda. The Infrastructure Investment and Jobs Act also funnelled US$700 billion into electrification, renewable energy and digital infrastructure and has already funded 20,000 projects since 2021. The IRA is part of a broader policy agenda with the CHIPS and Science Act that provides US$280 billion in federal funding for research and the fabrication of logic and memory chips inside the United States. Despite the fractured state of US partisan politics, the Democratic Party guided the largest energy subsidy in US history into being with a new national ethos for greening the economy while tilting global competition in the United States’ favour. With those stately words, US President Joe Biden signed the Inflation Reduction Act (IRA) into law in August 2022. Economics, Politics and Public Policy in East Asia and the Pacific
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