There is a deep fissure in the global Right – and Trump is widening it
Trump’s protectionism is not an option for us. If voters want that, they’d be better off staying in the EU
Some wars spawn further wars; so it is with Donald Trump’s trade war with China, which has sparked a veritable civil war within his Republican Party. Rarely has the standoff between protectionists and free traders been as overt and vitriolic as it is now, with possibly quite damaging consequences for Republicans in November’s midterm Congressional elections.
Historical comparisons are on the whole not a particularly helpful guide to the present, but on this occasion the parallels with Britain’s schism over the Corn Laws in the mid-19th century – which split the Tory party, denying it majority rule for nearly 20 years – are uncanny and almost exact, albeit in the opposite direction.
The effect of the steep import duties that the Corn Laws imposed was to keep food prices high, to the benefit of the landed gentry but the impoverishment of the general population. By depressing disposable income, and wider spending, the Corn Laws also held back the development of other industries such as manufacturing. In the end, Tory Peelites had to side with Whig rivals to end the tyranny.
The effect of the repeal was dramatic. Within a generation, Britain had become overwhelmingly dependent on imported grain; landed power and employment went into steep decline. But it also helped turbo-charge urbanisation, thereby cementing Britain’s position at the forefront of industrial and technological change. If ever there was a case study in the benefits of free trade, this is it.
Donald Trump’s new brand of populist protectionism seems to strike at the very heart of this economically liberal tradition, and is in essence a throwback to the old Republicanism that existed before the Second World War. He appears impervious to warnings that higher tariffs will make things more expensive for industry and consumers, thereby reducing spending from what it might have been and crimping economic progress.
This is not, of course, how the US president sees it. Instead, he regards import duties as a way of protecting American jobs from unfair foreign competition. As three of his economic advisers explained in yesterday’s Daily Telegraph, to him, the threat of tariffs is a negotiating tactic to win concessions from dastardly trading partners and lower barriers to trade in the round. For Trump, the purpose is also as much geopolitical as economic; it’s about halting Chinese ambition in its tracks, and in particular preventing China from gaining technological, and therefore military, superiority.
Yet it is not a message some of the Republican Party’s biggest industrial donors seem minded to accept. We live in a world of rapid technological change, as Charles Koch, the presiding power behind one of America’s biggest privately owned business empires and a substantial Republican donor, said in a video campaign this week. “Countries are trying to protect themselves from these changes,” he said. “They are doing whatever they can to close themselves off from the new, hold onto the past and prevent change. This is a natural tendency, but also a destructive one, because when people act in protectionist ways they erect barriers which make everyone worse off.”
The response from the White House was swift. “The globalist Koch Brothers have become a total joke in real Republican circles, are against Strong Borders and Powerful Trade,” Donald Trump said in a Tweet early on Tuesday morning. “I never sought their support because I don’t need their money or bad ideas.”
Unfortunately for Mr Trump, this is not quite true. Lots of Republican candidates need their money and support their ideas. Koch would presumably applaud Mr Trump’s tax cuts and his environmental deregulation, but he also expects Republican presidents to be fiscally responsible and support free trade. Trump has broken these assumptions. All of a sudden, Koch finds he’s shut out of the conversation. In every respect, it’s a shock to the system.
But it’s more than just wounded pride. Koch’s declaration of war against Trump speaks to a divide which has long troubled the Right on both sides of the Atlantic. It’s not just protectionism against free trade; it’s also globalism versus economic nationalism, and libertarianism versus conservatism. Once again, it’s becoming harder for the two to live together under the same roof. Old political alliances threaten to break asunder.
In Britain, the situation is complicated and confused by Brexit, which is itself an unholy alliance of protectionist and free market voices. But many of the same observations apply. Post Brexit, which of these tendencies is going to triumph – the more protectionist epitomised by the likes of Nigel Farage, and closet Brexiteers on the Left such as Jeremy Corbyn, or the champions of “Global Britain”, Boris Johnson and Liam Fox among them?
I’ve no doubt where economic necessity will take us. Protectionism is not an option for Britain. Indeed, if that’s what voters want, they’d be better off staying in the European Union, which like the US is a large and economically self-sufficient enough entity to get away with a protectionist disposition. Though apparently globalist in its ambition, the EU is essentially a protectionist endeavour, with myriad tariff and non-tariff barriers to trade. Britain on its own no longer has the economic clout to pursue such a course.
Instead, the UK must plough an overtly free-market, free-trade furrow. Britain is already among the world’s most open economies, but it must become even more so. To maintain international competitiveness and prosper economically, it will have no choice but to cut taxes and decrease regulatory burdens.
These necessities will split the Left as much as the Right. Many will feel let down and betrayed, and we can expect our politics to reflect it.
Koch is right to challenge Trump; free trade has been a demonstrably positive force for the US economy, but politically it has never been an easy thing to manage. Hyper-globalisation has brought old divisions bubbling to the surface anew. I doubt they will die with Trump; instead they will live on, gnawing away at the heart of the GOP.