THE POLITICS OF TRADE FAVOR TRUMP IN 2024
Donald Trump is, once again, making big promises on trade. If he is elected president in 2024, he says, he will impose new tariffs that will “end our gaping trade deficits,” “bring back millions of American jobs,” and “bring trillions and trillions of dollars pouring into the United States Treasury from foreign countries.” He says this influx of money will allow taxes on U.S. producers to come down. We just need to build on the successes of his administration.
These hopes are absurd. As a matter of policy, Trump’s record on trade is largely one of failure. But his message has been politically successful and could be again.
Trump’s projections of an influx of jobs and federal revenue don’t make sense because the more effective the tariffs are at protecting U.S. companies, the less money they would raise. You can’t tax an import that you have prevented from happening. For tariffs to raise a lot of money, imports have to stay high.
Peter Navarro, a top aide to Trump on trade, predicted that new tariffs would not lead to any retaliation from other countries. Instead, the European Union, Russia, Turkey, India and China all retaliated — so much so in the last case that almost all of the revenue from tariffs on Chinese products had to be spent taking care of American farmers who were casualties of the trade war.
The tariffs were supposed to boost employment at home by shrinking the trade deficit. They didn’t. In Trump’s last year in office, the trade deficit was higher than it was in Barack Obama’s last year, both in absolute terms and as a proportion of the economy. The manufacturing trade deficit, an item of special concern for Trump, rose on his watch, too.
None of these results have, however, led to any serious political challenge to Trump’s trade policies. Instead, his tariffs have become an item of bipartisan consensus.
When President Biden took office, he surveyed the tariffs’ comprehensively disappointing record and … decided to stick with them. Trump’s trade barriers on steel and aluminum from Europe, Britain, Japan and elsewhere have been tweaked but not lifted. The tariffs on Chinese imports are still there.
Trump’s leading potential rival for the Republican nomination, Florida Gov. Ron DeSantis, voted in line with the rest of the pre-Trump party when he served in the U.S. House, where he helped to pass a bill giving presidents the authority to negotiate trade agreements. Nowadays, he is criticizing the World Trade Organization and the naivete of previous U.S. trade policy toward China. DeSantis has been no more critical of Trump’s forays in protectionism than of anything else Trump has done.
Trump, in short, is setting the pace for both parties on trade issues. That’s not because public opinion has turned markedly away from trade: Gallup finds that Americans are more likely to consider trade an opportunity, and less likely to consider it a threat, than they were 10 years ago.
Both parties seem to have decided that protectionism appeals to a crucial group of up-for-grabs voters — whites from industrial states without college degrees — and is therefore a winning rhetorical stance.
That doesn’t necessarily mean we have a lot more trade barriers in our future. Even Trump, who was much more protectionist than his predecessors, didn’t follow through on all his bluster. That’s why NAFTA, which he called the worst trade deal ever made by our country, largely survived. Congress almost certainly lacks the votes to pass a major increase in tariffs or to withdraw from trade agreements, and that is unlikely to change in the next election or two. The U.S. economy, judging by trade flows, is as globalized as ever.
But we are not going to see much trade liberalization, either, even as China and others make their own trade deals. The politics of trade will favor Trump in 2024 — no matter how little he deserves the advantage.