Free Trade

Will Any 2020 Candidate Offer an Alternative to Trump's Trade Protectionism?

The Trump administration's "phase one" deal with China will keep many tariffs in place, but Democrats don't seem to have the guts to stand up for freer trade.

|

Whether President Donald Trump wins re-election this year, his protectionist economic views and skepticism about the benefits of foreign trade are likely to continue guiding federal policy for the foreseeable future.

Indeed, leading Democratic presidential candidates are far more likely to pander to the victims of Trump's trade war—farmers and manufacturing workers chief among them—than they are likely to call for reversing the policies that are actually causing the problems. Instead of taking the opportunity to draw a sharp distinction with the current administration—which has spent three years hiking tariffs, raising barriers to trade, and causing economic turbulence for American farmers and manufacturers—Democrats on Tuesday night's debate stage largely agreed with what Trump is trying to do for trade policy, even if they disagreed with some of his methods.

"This new trade deal is a modest improvement," said Sen. Elizabeth Warren (D–Mass.), referring to the United States-Mexico-Canada Agreement (USMCA), Trump's proposed replacement for the North American Free Trade Agreement (NAFTA).

But when Warren and Trump say the USMCA is an improvement over NAFTA, what they mean is it allows for less free trade. The new deal includes higher barriers to duty-free trade for automobiles and car parts, imposes new labor standards meant to hike the cost of manufacturing in Mexico, and has a 16-year sunset clause that increases long-term uncertainty.

Though Warren is happy to vote for those backward steps, she also makes clear that she'd like to take a few more.

"It will give some relief to our farmers. It will give some relief to our workers. I believe we accept that relief, we try to help the people who need help, and we get up the next day and fight for a better trade deal," she said Tuesday.

Again, keep in mind that when Warren says "better" she really means "more protectionist" (as her own trade policy paper makes clear). Warren opposed the Obama administration's Trans-Pacific Partnership (TPP) and has said she would block all new trade deals that do not impose American environmental and labor standards on other nations. That makes little sense, since one of the benefits of signing trade agreements (from a poorer country's perspective) is the opportunity to develop. History has shown repeatedly that labor standards increase as countries get richer—but those incremental changes depend to some degree on foreign investment. Refusing to sign trade deals with developing countries will not cause those places to magically advance. More likely, it will cause them to stagnate.

Sen. Amy Klobuchar (D–Minn.) and South Bend, Indiana, Mayor Pete Buttigieg also endorsed Trump's USMCA deal on Tuesday night. Former Vice President Joe Biden offered a generally positive review of the deal, though he did not explicitly endorse it.

The only real note of disagreement came from Sen. Bernie Sanders (I–Vt.), a candidate who never misses an opportunity to remind voters he also voted against NAFTA. Sanders broke with his Senate colleagues and promised to vote against Trump's USMCA because it does not go far enough.

"The answer is we could do much better than a Trump-led trade deal," Sanders said. (Again, "better" equals "more protectionist.") He said he would not vote for any trade deal that did not put an end to the outsourcing of American jobs, or one that "does not incorporate very, very strong principles to significantly lower fossil fuel emissions in the world."

The disagreement between Warren and Sanders on trade earned some post-debate headlines, but the difference between their stances is mostly cosmetic. Both want to see less free trade than we have now, and are on the record supporting more barriers to trade than what Trump has already erected. That Warren is willing to accept Trump's protectionism as a stepping stone to her more competent version of his trade wars tells us that she is more practical about policy-making than Sanders is (but we already knew that). It also comes as little comfort to anyone who actually favors free trade.

If anyone in the Democratic primary field is going to stand against the Trump-Warren-Sanders consensus that trade is bad for Americans, you'd expect it to be Biden. He voted for NAFTA. He tried (and failed) to get Congress to pass the TPP when he was part of the Obama administration. And he occasionally makes a good point about the benefits of trade, as he did Tuesday night when he pointed out that exports are essential to American economic growth.

That's the part of the trade equation that Trump doesn't understand. A byproduct of imposing tariffs and fighting trade wars is that your own exports suffer. That happens because some of your trading partners will respond (as China has) by cutting off purchases of farm goods or raising their own tariffs in response. It also happens because your own tariffs backfire by making the goods manufactured in your own country more expensive, and therefore less competitive, in the global market.

Exports matter—and Biden understands this!

"I don't know that there's any trade agreement that [Sanders] would ever think made any sense," Biden said Tuesday, dismissing the Vermont socialist's absurd anti-trade stance. "But the problem is that 95 percent of the customers are out there."

Biden also seems to be getting pulled towards the "no new trade deals" view espoused by Warren—though without attaching as many conditions as she does. "There will be no trade agreements signed in my administration without environmentalists and labor at the table," he said, just three sentences before making his point about the importance of exports. "And there will be no trade agreement until we invest more in American workers."

Maybe Biden's mixed signals on trade are a defensive tactic he's using to appease everyone and maintain his fragile front-runner status. Perhaps we will see a more pro-trade version of Biden if he wins the nomination and gets to spar with Trump, but don't hold your breath.

The winner in all of this? Trump. He's handed the Democrats (and their labor union allies) a rewrite of NAFTA that fulfills many of things on their wishlist. He has effectively neutered the pro-trade voices within the Republican Party. And he may end up getting to run for re-election against an opponent who can't make a compelling argument against his trade policies—or, better yet, one who condemns Trump's trade wars while telling voters that her own trade wars will be good and easy to win.

No matter who wins, Trump's shifting of American trade policy is likely to stick. And that's bad news for pretty much everyone.

Advertisement

NEXT: The Trump Administration Wants To Speed Up the Delivery of Infrastructure Projects

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. They’re all offering an alternative to Trump’s trade policies – under socialism we’ll soon have nothing to trade.

  2. Of course not!

    And just to satisfy the Trumpistas: tariffs are taxes.

    And to pose a question, again, which none of them ever answer: what gives anybody the moral NAP right to control who I do business with or who I am friends with? Tariffs are an abomination both economically and morally. Tell me where you get the right to control other people’s things, or to delegate that right to Trump or the Dems or anybody.

    1. Tariffs are taxes but monetary manipulation, up theft, and corporate espionage are not – shorter ABC

      1. Shorter Jesse: “I won’t admit ABC is right, so I’ll throw in a bunch of non-sequiturs to distract from the issue”

        1. That was a well thought out point! Oh wait, neither was this.

          Difference? I’ll admit as much. Little Jeffy will be lying years from now about how he never trolls and only posts thoughtful posts.

        2. No he isn’t you lying pedophile piece of shit.

    2. Gee. Were you this upset when the trade deals Clinton and company negotiated? You know, the ones that made it easier, no, actually GUARANTEED, that American companies would send manufacturing jobs overseas, costing the jobs and livelihoods of millions of people?

      Were you this upset when those trade deals resulted in MASSIVE trade deficits with foreign countries? Were you THIS USPSET when China manipulated its currency to ensure that their products are cheaper and resulted in trillions of dollars in trade imbalances?

      WERE YOU? Or is your outrage solely reserved and aroused because Trump stood up to those countries and is forcing them to accept more equitable deals?

    3. Meh.

      It’s ludicrous how Reason is so much more outraged by taxes on Emperor Xi’s slave produced geegaws than taxes on US labor, sales, or investment, and in the name of “muh freedom” at that.

      Note that our tariffs are way too *low* to satisfy that Arch Commie rat bastard, Adam Smith, who favored tariffs to offset local taxes on production:
      Wealth of Nations, pg. 356
      https://ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf

      “It will generally be advantageous to lay some burden upon foreign industry for the encouragement of domestic industry, when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former. This would not give the monopoly of the borne market to domestic industry, nor turn towards a particular employment a greater share of the stock and labour of the country, than what would naturally go to it. It would only hinder any part of what would naturally go to it from being turned away by the tax into a less natural direction, and would leave the competition between foreign and domestic industry, after the tax, as nearly as possible upon the same footing as before it.”

      1. Also note that during the early part of the 20th century, tariffs were a primary method utilized by successive Republican presidencies of protecting American industry (the “Full Dinner Pail” platform) from the predatory practices of Europe (who behaved much like China is behaving now), and paying off the national debt, and that was a period of great prosperity in America.

        The public debt during that time also decreased by 36%. So, believe it or not, there are actually some benefits to tariffs if you look beyond the simple “Cheap goods are all that matters!!!” arguments that libertarian pseudo-intellectuals love to throw around.

    4. And just to satisfy the Trumpistas: tariffs are taxes.

      Yes, they are taxes on consumption and taxes on goods that are otherwise not taxed at the same level as goods produced in the US. As such, they are good taxes.

    5. And to pose a question, again, which none of them ever answer: what gives anybody the moral NAP right to control who I do business with or who I am friends with?

      The government takes half my labor at gunpoint. I defend myself at the voting booth by voting for policies that limit the damage. Tariffs on imports from low-wage countries are one such policy.

      You don’t like it? Get rid of my income tax first. Until then, don’t whine to me over a few percent consumption taxes compared my income taxes.

  3. Will Any 2020 Candidate Offer an Alternative to Trump’s Trade Protectionism?

    Those Democrats you show all voted for pre-Trump trade restrictions. So their “alternative” to Trump getting China to agree to lower trade restrictions is Socialism, which ironically usually involves oppressive trade restrictions.

    1. “Will Any 2020 Candidate Offer an Alternative to Trump’s Trade Protectionism?”

      Trump leads. We are entering the Age of Trump.

      Reason can gnaw the bones of their resentment with the #Neoclowns and other Globalists in the ashbin of history.

      #winning

  4. No. But they’re willing to say they will if it gets them into the White House.

    1. $park¥ nails it!!! Good job $park¥ !!!

      1. You should change your handle to use $, £, and ¥.

  5. but Democrats don’t seem to have the guts to stand up for freer trade.

    It’s not that Democrats don’t have the guts to stand up for freer trade, it’s that they don’t believe in freer trade.

  6. she would block all new trade deals that do not impose American environmental and labor standards on other nations.

    Imperialism.

  7. T cornering the market on (D) and (R). dummies.

  8. The Democrats have never wanted free trade.

    1. I don’t think that is true. I’m pretty sure they wanted free-er trade when Republicans attempted to meddle with their slave markets pre-civil war.

      1. Much like trade with for the slave produced geegaws of Emperor Xi, it’s an abomination to call pre-civil war slave markets “free trade”.

  9. Is it sheer infantilism to claim what Trump is doing is merely protectionism? If you are one of the morons writing for reason it is. Leverage to get a better deal where none existed before is a strategy as opposed to a tactic (protectionism).

    1. Reason gave up actual intellectual defense of their Globalist policies years ago.

      Open borders for people and products are all just dogmatic faith now.

  10. Will Eric ever stop calling market sell offs of .75% crashes?

  11. Drumpf’s playbook consists of creating a problem then taking credit for partially fixing the problem he created!

  12. Of course! Establishment Democrats and Republicans will continue to let their donors import from countries with low labor costs and slave labor while saddling blue collar workers in the US with minimum wage laws and massive overhead. Then they’ll force the US middle class to hand over massive amounts of money to pay for it all! It’s what the New Libertarianism demands!

  13. Warren opposed the Obama administration’s Trans-Pacific Partnership (TPP) and has said she would block all new trade deals that do not impose American environmental and labor standards on other nations.

    Good! That’s something libertarians should agree with. That is, we can ratchet down our tariffs as we reduce our domestic government-imposed labor costs.

    Having no-tariffs on imports while having costly labor regulations just isn’t a feasible economic environment.

  14. “This new trade deal is a modest improvement”

    Let’s decode ‘Socialist Speak’. Translation: POTUS Trump got a smashing victory at the negotiating table.

  15. Well, in my opinion the ‘trade war’ with China is bigger than just ‘trade deals’. It’s above removing the leverage China has on other countries. It’s also about trying to get them to honour trade deals which they rarely do. All I heard since the creation of the WTO is how China flouts it.

    Which isn’t surprising given they’re authoritarian commies.

    I don’t know if I ever heard Trump say he’s ‘not for free trade’ but rather against ‘bad deals’.

    I want to see where all this lands America because if I read Trump correctly, this is a GOOD thing re-setting trade deals with China.

    I think there’s some conflating going on like how people conflate anti-illegal immigration with being anti-immigration as a whole. And for some reason Reason itself refuses to make this distinction.

  16. What can they possibly offer?

    Look at the field. You have an illiberal who acts like she’s Tommy Flanagan’s soul mate when it comes to notions of truth, you have a literal Red commie who has shown time and again is an angry economic illiterate gnome who never worked an honest day in his life, a woman who treats her staff poorly (show me a person who mistreats their workers actually cares for people so why would she care for farmers?), and a candidate who looks like he’s ready to sit by the window and just let the breeze take over and some guy from Indiana with run of the mill prog dispositions. Meh.

    Get real. These is a pack of eggs you send back to the grocery store.

    None of these people exhibit or exude confidence on any level except to spew bull shit progressive tomes and rehashed ideas.

    Trump is actually making some interesting moves. Whether they pan out, we’ll see. But you gotta give the guy some props for shaking it up a little. Yes, there are some elements of protectionism in there but let’s hope that it’s used for leveraging purposes. I’m just guessing on the latter. For all I know, he probably does actually care about protectionism.

    1. ‘these are’.

      Muh edit button?

  17. Will Any 2020 Candidate Offer an Alternative to Trump’s Trade Protectionism?

    The ones taking bribes from China might.

    1. Like Brain-Damaged Biden, perhaps?

  18. Don’t confuse Free Trade with Fair Trade.
    There cannot be free AND fair trade when one side (China) continually lies, cheats, and steals as it benefits them. Trumps tariffs are the method he’s chosen to punish China for those transgressions.

  19. Excellent read, Positive site, where did u come up with the information on this posting? I have read a few of the articles on your website now, and I really like your style. Thanks a million and please keep up the effective work. https://fauxncotton.com/Jumanji-The-Next-Level-Dwayne-Johnson-Vest

Please to post comments