WHAT IS IT WITH TRUMP & CARS?

President Donald J. Trump, as whitehouse.gov always refers to him, has tweeted more than once about how his ultimate goal in trade is complete free trade, with no trade barriers at all — except, he’s recently taken to adding, in autos. In fact, that’s now his official goal in the U.S.-Europe trade agenda that his own surprised advisers pasted together while he and EU president Jean-Claude Juncker waited to start a joint press conference at the White House last month. As the document they produced put it: “We will work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on nonautomotive industrial goods.”

Free trade is a fabulous goal, as the president might put it. He has several times referred to how he learned as a student at the Wharton School that free trade was best, thus confirming Keynes’ dictum that “in the field of economic and political philosophy there are not many who are influenced by new theories after they are 25 or 30 years of age.” But when it comes to ideas, newer is not necessarily better. If his professors at Wharton did inculcate in the young Mr. Trump the idea that free trade is good, we should take him at his word and challenge now-President Trump to make NAFTA and the WTO true free trade deals, with no ifs ands or buts. Doing so would be uncomfortable politically. We’d have to un-protect our supply-managed sectors, for one thing. But it would be a lot less uncomfortable than the big economic contraction a new era of high tariffs would bring.

If free trade is best, however, why the exception for autos? I doubt Mr. Trump picked that up at Wharton. We academic economists generally don’t make exceptions for particular industries (in part because most of us don’t actually know much about particular industries!). We do recognize a general national security exception. If an industry is crucial to your defence, you want to be sure it stays tooled-up enough to do whatever job will be required of it when conflict comes. Even Adam Smith accepted that argument. He favoured support for the British merchant marine given that in wartime large parts of it moved over to the Royal Navy.

Thermonuclear wars depend more on rockets than cars but conventional wars of the sort the U.S. still regularly fights do require vehicles, so vehicle-making capacity probably is crucial to the national defence. But that doesn’t mean any and all automotive protection is justified. The current U.S. tariff on trucks is a whopping 25 per cent. Would there really be no U.S. truck industry without it? U.S. demand for pickup trucks seems almost limitless. Would none at all be built in the U.S. if Toyota and Volkswagen were allowed in tariff-free? Or with a tariff of, say, 10 per cent instead of 25? This all assumes, of course, that the separate industry for military vehicles, a major beneficiary of U.S. government procurement, isn’t vibrant enough to survive even if its non-military equivalents did disappear in favour of imports. The U.S. army doesn’t run on Ford F150s, after all.

I suspect the real reasons for why the president wants to exempt automotive products from free trade are that: it’s a big industry, both in GDP and lobbying weight; it’s big on his political home turf in the Midwest; and if that 25 per cent tariff on trucks did go to zero with any suddenness, that likely would cause big short-term disruption, though that’s an argument for gradual rather than immediate removal.

Let’s face it. In this society, even despite growing anti-car activism, cars are still totemic, in the dictionary sense of being a totem, i.e., an object a group or individual can have kinship or even a mystical relationship with. Whether it’s Dinah Shore singing “See the USA in your Chevrolet,” or Jack Kerouac’s On the Road, or Route 66, or Springsteen’s “Cadillac Ranch,” young Donald J. Trump grew up in a country where cars and highways were central to the culture.

But hiving off the automotive sector from a policy of free trade smacks of the 1970s, when industrial strategies based on cars and trucks were all the rage. Cars today do use advanced technology. We just replaced a 2005 van with a 2018 hatchback and I’m now on my third day of reading the manuals — yes, plural: one for the car in general and one for the computer. (Some instructions only a lawyer would think necessary: Make sure no small animals are in the engine compartment before turning the key.) It does seem unlikely that such complex machines are going to be designed, or their production orchestrated, by the cheap labour that protectionists in the industry seem to fear most.

YOUNG DONALD J. TRUMP GREW UP IN A COUNTRY WHERE CARS AND HIGHWAYS WERE CENTRAL TO THE CULTURE.