Conservatives, Don't Embrace Trump's Protectionism
For many, Adam Smith won the intellectual argument about free trade with the publication of The Wealth of Nations in 1776. But the tide of protectionism has ebbed and flowed ever since. Driven by misleading populist rhetoric from Donald Trump, Secretary Clinton, and Senator Sanders, protectionism is now rearing its ugly head once again — providing the most credible threat to free trade since the Great Depression.
Given the recent Brexit results and rising protectionist sentiments across the globe, the United States now stands at a crossroads. We can either turn our backs on our country’s historical role in promoting free trade or use this opportunity to redouble our efforts. Policymakers’ decisions in the near term will have lasting consequences.
Since World War II, there has been a broad consensus among economists about the benefits of free trade. In fact, among this notoriously disagreeable bunch free trade was just about the only issue that received nearly unanimous support. As economic studies and academic opinion did not exist in a vacuum, public policy soon followed. Over roughly the same period, presidents of both major parties in the United States largely embraced trade liberalization, and most conservative Republicans in Congress have been stalwart supporters of free trade agreements — often providing the critical support needed to secure passage.
Despite this bipartisan history, there are ominous signs on the horizon for the future of free trade in the United States as well as the Republican Party. A March poll conducted by the Pew Research Center found that a slight plurality of voters believe trade agreements are a good thing, while an astonishing 53 percent of those identifying themselves as Republican or who “lean Republican” said that free trade agreements are a bad thing for the United States.
On top of a skeptical base, the Republican Party’s presumptive presidential nominee, Donald Trump, has made hostility to free trade a centerpiece of his campaign. At various points, Mr. Trump has suggested renegotiating successful trade agreements, urging the Treasury Department to label China a currency manipulator, and imposing tariffs as high as 45 percent on items imported from China, Mexico, and Japan.
While some of Mr. Trump’s policy proposals have shifted throughout his presidential campaign, his wrongheaded positions on trade have been constant. Even dating back to the late 1980s, Mr. Trump used nativist language to argue that Japan was taking advantage of the United States and urged Congress to adopt protectionist policies. Thankfully, our elected leaders ignored Mr. Trump’s screeds then; free-trading Republicans would be wise to reject his protectionist ideas today.
Critics of free trade, like Mr. Trump, often point out that the United States persistently runs large trade deficits — that is, on net, importing more than we export. While true, this isn’t necessarily a problem. For starters, the U.S. benefits from both imports and exports: imports make consumer goods and manufacturing inputs cheaper for American families and businesses.
But do continual trade deficits cause job losses as Mr. Trump and others suggest? The data certainly do not support that conclusion. As Derek Scissors of the American Enterprise Institute has pointed out, the trade deficit reached its highest level in 2006, when the unemployment rate was below five percent. In 2009, by contrast, the trade deficit had fallen dramatically, while the unemployment rate was hovering above nine percent.
The protectionist policies Mr. Trump supports raise the specter of a trade war that would hurt American families and businesses most, while enriching the sort of politically connected unions, favored businesses, and insiders he rails against. If Mr. Trump were to institute tariffs — taxes on imports — the results could be devastating, particularly for the least well off. A recent study by the National Foundation for American Policy found that tariffs like the ones supported by Mr. Trump — 45 percent on imports from China and Japan and a 35 percent tariff on imports from Mexico — “would cost U.S. households in the lowest 10 percent up to 18 percent of their (mean) after tax income or $4,670 over 5 years.” In other words, massive tariff hikes would amount to huge, regressive tax hikes on Americans struggling to make ends meet.
Make no mistake, free trade is not perfect. Inevitably, some regions, industries, and workers are worse off as a result of trade liberalization. But on the whole, free trade has proven its merits time after time: productivity has increased; purchasing power has increased; markets once closed to American exports are now open; and our standard of living has risen dramatically. Our commitment to free trade has also lifted millions out of grinding poverty abroad, which has made much of the world more secure. In short, free trade has led to more wealth and security.
The Republican Party has an honorable history of supporting free trade over the last 70 years; this has served America’s domestic and geopolitical interests well. While the party’s current standard bearer is hostile to free trade, its Congressional leadership is not. Rank and file Republicans should side with Speaker Ryan and Majority Leader McConnell and continue making the case for free trade to an increasingly skeptical public — even in the face of Mr. Trump’s ill-conceived protectionism. The GOP’s reputation — and more importantly, American interests — depends on it.