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.