Limiting free trade will backfire, no matter the party
Desperate political leaders of all stripes – Republican, Democratic, communist — have found a common enemy: free trade.
The GOP has turned its back on the party’s long-term commitment to liberalizing trade, it seems, because key party leaders have decided foreigners are bad and scary. Not only the “usual” scary foreigners, either (i.e., the nonWhite ones). President Donald Trump levied tariffs on hundreds of billions of dollars of goods from China, his most frequent punching bag, but he also launched trade wars against our allies in the European Union, Britain, Canada and elsewhere.
It was a sloppy, aimless attempt to show strength and it backfired. Study after study found that the costs of Trump’s various trade wars were either mostly or entirely borne by American consumers and businesses, and that the tariffs likely reduced U.S. employment.
None of this matters to candidate Trump.
He recently announced that, if elected to another term, he’d ratchet up his trade wars by imposing a 10% universal tariff on all goods from all countries. (He calls this a “ring around the collar” of the U.S. economy, which … does not exactly make it sound appealing.) Such taxes — and yes, tariffs are taxes — would raise prices further for American consumers, at precisely the time Republicans have been hammering Democrats for high inflation.
Trump’s proposed global tariffs would also infuriate our allies and trading partners, who would likely retaliate with tariffs of their own, as they did last time. They might also be less willing to cooperate on other matters of strategic interest to the United States.
It’s tempting to dismiss this foolishness as Trump-specific and therefore not worth taking seriously. When Trump took office, there was little public interest in trade one way or the other, much less any groundswell of support for more protectionism. Other Republican politicians, particularly those representing states that depend heavily on exports of U.S. products, initially (if halfheartedly) criticized Trump’s trade wars.
No longer. At last month’s Republican presidential debate, there was plenty of standard China-bashing. But when candidates were asked about their economic and geopolitical strategies, no one discussed ways to deepen our economic relationships with allies or trading partners. To the contrary: They spoke of creative ways to use U.S. economic might to punish other countries, including those with which we have friendly relations and strong economic ties.
Florida Gov. Ron DeSantis took things a step further by calling for unilaterally invading Mexico — which recently surpassed China to become our top trading partner.
Alas, Democrats have not shown much more enlightenment. In some cases their ideas are nearly identical.
Despite calling Trump’s tariff policy “self-defeating,” “shortsighted” and jobkilling during the 2020 election, Joe Biden in his presidency has maintained nearly all of Trump’s tariffs, or swapped them out for different trade restrictions. Biden has sometimes spoken of embracing allies economically to solidify an alliance against China. But his administration’s marquee effort in Asia, the Indo-Pacific Economic Framework for Prosperity, deliberately excludes tariff liberalization or otherwise opening up market access.
Biden has said his trade approach is designed to help American workers. Unfortunately, it might well do the opposite, as he had acknowledged back in 2020 when his tariffs were still considered Trump’s. This is especially true with regard to duties on materials or other inputs that get purchased by U.S. firms to make their own products.
For example, the number of Americans who work at companies that use steel as an input (think: automakers or appliance manufacturers) dwarfs the number of Americans employed by steel companies. And yet Trump implemented, and Biden largely maintained, nearly worldwide steel tariffs, jeopardizing the jobs of downstream workers.
Similarly, within the U.S. solar industry, only about 1 in 8 workers is employed in solar manufacturing. The vast majority of U.S. solar jobs involve the installation, distribution, development, maintenance, etc., of solar projects. Whether the goal is reducing carbon emissions or maximizing job growth, the U.S. government should be doing everything it can to reduce the cost of solar parts.
Instead, this past spring, lawmakers from both parties tried to force Biden to impose even more duties on imported solar parts. (To his credit, Biden vetoed the measure.)
American political forces that are usually at odds apparently agree that economies should be as closed off as possible, whatever the consequences. Nationalists and populists in other countries have also pushed for more trade barriers. Even China, which has enriched itself through trade with other countries, is now reportedly flirting with curbing trade to demonstrate its lack of dependence on the West as its own economy falters.
“Self-reliance” sounds seductive. But that’s before you consider the devastating long-term damage from prior episodes of beggar-thy-neighbor protectionism. Or, for that matter, the shortterm problems that come from accidentally putting your own populace out of work.
Catherine Rampell, originally from Palm Beach, is a columnist for The Washington Post.