Trump's protectionism continues long history of US rejection of free trade

Free traders have vilified President Donald Trump^[1] as a pernicious protectionist because of policies such as hiking tariffs^[2], abandoning the Trans-Pacific Partnership^[3] and saying he’s prepared to walk away from the North American Free Trade Agreement^[4].

They fear his policies will hurt the U.S. economy by restricting access to foreign goods. But are these policies really so radically different from past administrations?

Absolutely not. The fact is the U.S. has never been a truly free trade country – one with virtually no barriers to trade with other nations – as some people seem to think^[5]. The idea that the U.S. ever was is a myth.

This is among the topics I’ve been exploring for an upcoming book, titled “The Rise of the Guardian State.” My research shows the reason both Republicans and Democrats have pursued protectionist policies^[6] – despite their rhetoric – is part of the fabric of the American democratic political process.

The ‘guardian state’

Long before the U.S. became the so-called defender of the liberal economic world order after World War II^[7], it had become a guardian of another kind.

U.S. policymakers’ free trade rhetoric has always been tempered by what I call a “guardian” mentality intended to shelter domestic industries and workers from the full impact of globalization and open trade. In other words, the U.S. government tends to talk a lot about free trade but then maintains a protective layer of trade barriers across the economic landscape.

A paper I published^[8] in 2000 showed how this is a natural outgrowth of democracy and the granting of suffrage to more people. As the masses gained greater political power at the turn of the 19th century, politicians faced greater pressure to protect their constituents from the vicissitudes of trade.

For example, at the ballot box, the issues of economic growth and unemployment have often been critical to outcomes. In fact, in every presidential election since World War II, economic issues have figured prominently if not centrally.And on a broader level, special interests such as unions and business groups brought their political weight to bear at the doors of lawmakers to protect their members.

An axis of guarded trade

Hence what we have perceived as a partisan schizophrenia in trade policy^[9] in American history between the so-called Republican free traders and Democratic economic nationalists has usually been nothing more than moderate shifts back and forth along an axis of guarded trade.

Even the pro-free trade Republican administrations of Presidents Ronald Reagan and George W. Bush promoted significant barriers^[10] to trade. For example, Reagan pushed Japan^[11] to unilaterally limit the number of automobiles it exported to the U.S., while Bush erected tariffs against foreign steel^[12].

And in the 2016 presidential election, there was scant fundamental difference between the two main candidates’ trade policies. Both Hillary Clinton and Trump^[13], notwithstanding some minor differences on trade, questioned American support of multilateral trade agreements and engaged in worker-centric and populist rhetoric on globalization.

Trade’s costs and benefits

But if America could get very close to a free trade policy, would that be a good thing?

No major country has ever been a purely free trader in modern history. My research^[14] for an article published in 1985 demonstrates that Great Britain came closest from 1860 to World War I, when the country eliminated virtually all tariffs.

Among major nations in the post-World War II period, the U.S. has been closest to the free trade pole. But as noted above, with a plethora of tariffs and quotas on foreign goods^[15], the U.S. is still some distance away from late 19th-century Britain’s free trading ways.

We know trade carries great benefits^[16], as is clear from the fact that the most prosperous nations today embrace trade as a vehicle to greater wealth. But trade concomitantly generates costs.

While the benefits of freer trade are spread over society as a whole in the form of rising real incomes and access to superior products, some localities experience costs that severely plague specific groups. The “destructive” part of “creative destruction^[17]” – coined by political economist Joseph Schumpeter to characterize capitalist competition – is synonymous with industries failing and their workers losing jobs.

While in theory such dislocation can be overcome over time by people migrating to more competitive industries and wealthier regions, in the short run it is devastating for families that are less mobile^[18] than others. And in fact people are far less mobile than liberal theorists like to contemplate (especially older blue-collar and unskilled workers).

Indeed an overwhelming amount of research^[19] suggests that theories upon which free trade are based often fail quite significantly in the face of reality.

And that’s where protective barriers come in. They guard these groups from the economic dislocation of unrestricted competition across national boundaries. This renders a capitalist society more tolerable.

‘Nothing in excess’

That being said, going too far in a protectionist direction is surely as devastating, if not more so than a world of purely free trade. As in so many other dimensions of human life, the famous Greek aphorism^[20] “nothing in excess” rings true.

The present article is not an attempt to paint Trump as mainstream on trade policy in any way. Indeed, he has pursued a very aggressive protectionist agenda^[21], even when measured against the most protectionist Democratic administrations.

But I do wish to suggest that the debate over trade in American history is not as bipolar as most believe and that the differences between Trump’s and past administrations are more a matter of degree than kind.

And if trade goes along the lines of Trump’s other political priorities, we may in fact see that U.S. trade practices will not change as significantly as many believe. His protectionist bark is likely bigger than his bite^[22].

References

1. ^{^} Donald Trump (economictimes.indiatimes.com)
2. ^{^} tariffs (www.cbsnews.com)
3. ^{^} Trans-Pacific Partnership (www.politico.com)
4. ^{^} North American Free Trade Agreement (www.reuters.com)
5. ^{^} as some people seem to think (www.worldfinance.com)
6. ^{^} have pursued protectionist policies (theconversation.com)
7. ^{^} defender of the liberal economic world order after World War II (www.worldfinance.com)
8. ^{^} paper I published (www.tandfonline.com)
9. ^{^} schizophrenia in trade policy (classroom.synonym.com)
10. ^{^} significant barriers (www.brookings.edu)
11. ^{^} pushed Japan (www.politifact.com)
12. ^{^} erected tariffs against foreign steel (www.businessinsider.com)
13. ^{^} Hillary Clinton and Trump (nationalinterest.org)
14. ^{^} My research (works.bepress.com)
15. ^{^} plethora of tariffs and quotas on foreign goods (www.cbp.gov)
16. ^{^} great benefits (www.economicshelp.org)
17. ^{^} creative destruction (www.nytimes.com)
18. ^{^} less mobile (www.theatlantic.com)
19. ^{^} research (wer.worldeconomicsassociation.org)
20. ^{^} famous Greek aphorism (hellenicantidote.blogspot.com)
21. ^{^} very aggressive protectionist agenda (theconversation.com)
22. ^{^} bigger than his bite (www.salon.com)