Workers prepare to lift a bundle of steel reinforcing bars in Shanghai. Photographer: Qilai Shen/Bloomberg

To be fair, ourselves, and many others, never thought that there was going to be some sort of volte-face on trade policy when Biden took over. But even bearing this in mind it is still quite shocking that trade protectionism has increased notably under Biden’s presidency and not levelled off, let alone fallen.

For instance, if we look at the number of net harmful trade actions taken by the US in the past two years, we see a rise of 10% in the annual average compared to the prior four years when Trump was in the White House. If we just look at net harmful actions against China, the rise is over 40%.

What’s more, we should not forget that the Biden administration has kept many of the harmful trade actions that Trump imposed on China. One of these, on imports of steel and aluminium, was the subject of a challenge by China and others at the World Trade Organisation (WTO). The WTO’s recent ruling was that these tariffs were illegitimate. Of course, these tariffs were imposed under the Trump administration on the grounds that steel and aluminium imports could endanger national security.

But rather than acting contrite when chastened by the WTO, the Biden administration doubled down and basically argued that the WTO does not have the authority to pass judgement on matters of US national security, and hence won’t be rescinding the tariffs. But it is not just China that’s been stung by the Biden administration’s tough trade tactics.

The EU too seems to think that it may have a case to take to the WTO over Biden’s inflation reduction act. For contained in this act is the stipulation that ‘green’ components used in the production of energy efficient products must be manufactured in North America to gain tax credits. EU firms believe that this harms them – and others – that manufacture such components outside of the US. And then there’s the UK, of course, which has long desired a free trade agreement with the US now that it has shaken off the shackles of the EU. But its efforts have been so frustrated by the Biden administration that it has taken to getting deals with individual states in the US instead, although it only has three of these so far.

If we accept that US protectionism has probably gone up under the Biden administration, not down, what does this imply for the global economy and financial markets? Perhaps to be fair, one point we have to make is that any increase in protectionism may have come more from circumstance than ideology. The ‘circumstance’ in this case being the pandemic and how this has caused a sea change in issues such as trust with respect to China, and the security of global supply chains. Russia’s invasion of Ukraine and its consequences for Europe given its previously high dependency on Russian gas imports is another example even though the US has been less directly impacted by the conflict. These instances would seem likely to lift protectionist leanings for any US administration whether Republican or Democrat.

Mr. Steve Barrow, Head of Standard Bank G10 Strategy, said the economic cost of the pandemic, Russia’s invasion – and rising US protectionism – has been this sharp rise in inflation. No doubt many of these pressures will fade, but they won’t disappear and the longer the US remains wedded to such a tough protectionist stance the more it seems likely that extinguishing inflation will remain out of reach. Undoubtedly, there is pressure on the US administration to ease tariffs on China in order to help lower inflation but the fact that it has eschewed this pressure when inflation has been so high tells you everything you need to know about the protectionist bias of the Biden administration. “Looking ahead we think the cost of this will be higher inflation than would have otherwise been the case and probably weaker growth as well”, said Mr. Steve Barrow.