Our Work

Odd Remarks by the U.S. Trade Representative

• February 23, 2024
• Michael Mandel

During the “Big Tech” era, the US economy has substantially outperformed major European countries, and that advantage only widened in the pandemic years. Since 2007, U.S. productivity growth has averaged 1.2% per year, compared to only  0.1% annually for France and Germany (Table 1). And real wage growth in the U.S. averaged 1.1% annually, compared to 0.7% for France and 0.8% for Germany. (Table 2)

Drilling down, it’s clear that much of that difference between U.S. and Europe is due to the strong gains in the American tech and ecommerce sector.  For example, real wage gains in the U.S. tech and ecommerce/retail sectors have averaged 1.6% per year since 2007, double the overall real wage gains in France and Germany.

Against this backdrop of strong wage and productivity growth, recent remarks by U.S. Trade Representative Katherine Tai have an odd ring to them. At a January 31 competition conference in Europe, Tai argued that:

 “I think for a long time we’ve pursued this assumption that well, these are iconic American companies. They are brand names that we’re very proud of. Therefore, anything that is good for them will be good for us. That benefiting the companies will create that trickle down benefit to the company’s workers and the communities where those workers live.  And we’ve seen over time, that just isn’t happening.”

In fact, the data shows that U.S. workers, and tech/ecommerce/retail workers in particular, have done better than workers in major European countries.

Tai went down a similar route when she spoke at a February 12 event at the Council for Foreign Relations, and called into question the nationality of America’s leading tech companies.

“A question that I’ve been asking is: ……what is an American company? …..Because from a tax perspective, ……how many of our big tech companies are actually, for tax purposes, headquartered in other places and actually paying taxes there as opposed to paying taxes here. If that’s the definition of an American company, I’ll have to ask you and others, how many of these American companies are actually really American companies?”

That’s a strange take for the country’s lead trade negotiator. Certainly, there’s a vigorous debate about how best to regulate and tax the most successful tech companies. But there’s little doubt that they are American companies, investing in America, benefiting American workers, and paying American taxes. Tai should be supporting them, not undercutting them.