Trump, Reagan, and Why Republicans Flip-Flopped on Free Trade

The Donald is more like The Gipper on trade policy than you think. And not in a good way.

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Donald Trump's economic advisers have gone from ridiculing tariffs and subsidies to promoting pure protectionism because of the paradigm-shifting, reality-distorting, cringe-inducing, and corrupting influence of power. The Republican Party's U-turn on free trade is the sad story of a team of presidential advisers with two opinions for every man. It's a cautionary tale of how the temptations of political power promote personality over principle.

Before Trump took office, his advisers stood for free trade, which Ronald Reagan helped make central to the GOP.

Take former Congressman Mike Pence. In the House of Representatives, he voted to normalize trade relations with China. He praised NAFTA, voted for the Central American Free Trade Agreement, supported the Trans-Pacific Partnership, and backed free trade agreements with Australia, Singapore, Chile, and Peru.

Even though Pence represented a state with over a hundred thousand auto workers, he voted against then-president Obama's corporate bailouts on principle.

After joining team Trump, Pence was a changed man. Rescued from an unpopular governorship, Pence was thrust into the national spotlight and his political career was given a new life—and more importantly, a new identity.

His conversion to protectionism was so sudden and complete that he had a hard time convincing journalists of his new faith.

As Pence hit the talk show circuit, we learned that the trade agreements he had supported over his political career were now "bad deal[s]" and "up for renegotiation." A month before he was sworn in as vice president, Pence went from badmouthing banking bailouts to bankrolling the Carrier corporation in his home state. One year after supporting free trade with China, he declared it enemy number one.

About the same time, Trump's campaign adviser Stephen Moore and White House Chief of Staff Reince Priebus were stressing key elements of protectionism in their speeches and public appearances. Moore told a group of top Republicans that the Grand Old Party was no longer the party of Ronald Reagan. "I used to be a free trader," he said. "The political reality is there's a backlash against trade. Whether we like it or not, we better adapt the rules in ways that benefit American workers more, or free trade is not going to flourish."

The Republican Party's bedrock principles are shifting at the rate of one presidential adviser at a time. After a year in office, members of Trump's economic team have either adopted the commander in chief's line on trade, or kept a low profile, or resigned.

As the U.S follows other countries down the path of economic nationalism, advocates for free trade are losing their voice. Fewer are making a compelling public case for free trade, as Nobel Prize-winning economist Milton Friedman did for decades.

It's a worldview that Moore, Priebus, Kudlow, and Vice President Pence all shared before joining team Trump and that Ronald Reagan stood up for inconsistently in the 1980s. Although NAFTA and the precursor to the World Trade Organization were born from his administration, Reagan also raised a 100 percent tariff on Japanese electronics, and a 45 percent tariff on Japanese motorcycles. He slapped export quotas on cars and machine tools and Canadian lumber and sugar. Enough economic nationalism to make our current protectionist-in-chief proud.

Which goes to say: Maybe president Trump is more Reagan-esque than he gives even himself credit for.

Produced, written, narrated, and edited by Todd Krainin.

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  1. Didn’t presidents Bush and Obama impose limited tariffs too? It seems weird that his tariffs are being framed as something out of the ordinary or some break from recent history. Or maybe there is a difference between the Bush and Obama tariffs versus the Trump tariffs?

    That might make for an interesting read.

    1. Is your point that because other Presidents have imposed tariffs that Trump’s should be accepted? Nice, principled position you’ve got there.

      You know, you’re allowed to disagree with politicians on specific issues and still support them overall.

      1. Read much? I assume not.

        I’m asking what was the difference between their tariffs and the ones imposed by Trump.

        1. I’m trying to understand the relevance of Bush and Obama to an article about Trump and Pence, unless you’re just trying to deflect or make excuses for Trump and Pence.

          Or are you trying to equate Bush, Obama, and Trump? If so, then yes, they are all authoritarians and I agree completely.

          1. No one is trying to deflect from anyone. The article mentions how Reagan had imposed tariffs, as well, and argues that Trump’s position is in line with the Republican Party, which has never really been “free trade” necessarily.

            So, I’m asking “is there a material difference between Trump’s tariffs then his predecessors?” It seems like they might be, because that seems to be the central focus of Reason’s criticism of him (whereas, I think the central criticism should be foreign policy, but whatever). So, I’m only wondering how are they materially worse?

            1. The Trump Administration is also obsessed with micromanaging the auto industry. Last week it asked that 40% of North American cars and 45% of light trucks be built with labor that is paid at least $16 an hour. Fifteen percentage points of this could come from high-skilled workers but the rest would have to be paid to blue-collar workers in manufacturing and assembly. This is up from an earlier demand of 30% and 5% a few weeks ago.

              WSJ (behind paywall)

              1. My God, it’s like central planning.

                Thanks

                1. more

                  Mexico has good reason to reject this anticompetitive, market-distorting red tape. A wage mandate is ferociously debated in U.S. politics. Why does Mr. Lighthizer, a trade lawyer with no notable businesses experience, think he can or should dictate wages in another country?

                  But the real damage here would be to U.S. workers. The same goes for other new burdens such as requiring that 70% of steel and aluminium used in manufacturing be sourced in North America. Their jobs have been saved by freer trade, which has allowed production and labor efficiencies that have made the U.S. auto industry and more competitive.

                  All of this would also harm the availability of capital as investors flee the rising costs of doing business on the continent. The paperwork, administration and complexity of operations necessary to prove compliance with the new labor rules would be further incentive to invest somewhere else.

                  TRUMP IS ANTI-REGULATION!!! say buffoons like LoveCons and Sevo

      2. You do make a good point, though, Anal Cancer. Anytime anyone asks any question about anything at all even for a second the first response from the retarded is to screech “reeeeeeee…..complicit!”

        Maybe, you can tell me what the difference is, Anal Cancer. That would be appreciated, because I don’t know and that’s why I’m asking.

        1. Me: Hey is there a difference between these tariffs and previous ones or is this just a continuation of bad trade policies?

          Totally Sane Person: Oh my God, why do you love Trump?

          Me: Ummmm…I’m just asking is there a difference?

          Totally Sane Person: Look at the Trumpist here

          Me: So there is or isn’t a difference?

          Totally Sane Person: We get it, you love Trump

          It’s amazing how ostensibly “libertarian” *wink* *wink* commentators will debate issues of free speech, religious liberty, and gun rights, but you ask a question about trade and suddenly you’ve committed blasphemy.

          1. It might have been presumptuous for me to jump to the conclusion that your original post was trying to point out anti-Trump bias against Reason.

            You can clarify that here if you want to: Do you think Reason’s reporting on this is based on Trump’s anti-free trade position or just anti-Trump sentiment at Reason?

            1. Ok and I apologize for the ad hominem. I don’t understand why trade has become the only issue that everyone must be lockstep on.

              No, I do not believe there points on trade agreements are fueled by anti-Trump sentiment. I think they are right to be critical of the administration on that point. Again, I would prefer the criticism to be focused on his continuation of a warmongering foreign policy, but that is just my preference and obviously trade is a part of foreign policy.

              I am just trying to gather why trade is the focal point for criticism and that’s why I am asking if his tariffs are somehow different from his predecessors. Meaning are they worse or more punitive. I don’t know and that’s why I asked

              1. I don’t know the answer to your question. I do know that tariffs on raw materials (steel, aluminum) tend to be more far-reaching than finished goods (washing machines). Raw materials affect the price of nearly all goods.

                I can’t speak for Trump vs Bush, but in terms of Trump vs Obama the difference is that we’ve typically (right or wrong) thought of Republicans as the party of economic freedom and the Democrats as the opposite. You expect Democrats to raise taxes or tariffs, you don’t expect Republicans to. Is that a double-standard? Maybe, but much as we should hold Libertarians to high standards on all freedom, we should hold the Republicans to higher standards on economic liberty.

                My apologies for jumping on you as a Trump apologist. There’s so much of that going on around here these days, that I jumped to that assumption.

                1. It is also worth pointing out that while Reagan imposed, I believe, quotas rather than tariffs (on motorcycle and light trucks, if memory serves) he still maintained free trade rhetoric throughout and felt the need to give a rather convoluted explanation of why these things were exceptions. Obama did much the same, though IIRC he also used the Democrat’s “fair” trade canard.

                2. You expect Democrats to raise taxes or tariffs, you don’t expect Republicans to. Is that a double-standard?

                  No, but it’s a weakly-informed one. Republicans haven’t been as good, nor Democrats as bad, as you seem to think.

      3. I grade on a curve. Principles are nice to have, but when you’re making decisions, you have to choose from what’s available. If Trump’s no worse than avg., he should not be evaluated as bad per se.

    2. Didn’t presidents Bush and Obama impose limited tariffs too?

      Nowhere close to as many as The Dotard.

      Obama was free trade as witnessed by the TPP and its elimination of 18,000 tariffs. He did retaliate against China on tires, solar panels, and stee.

    3. All of the tariffs were just pandering.
      Bush’s tariffs were pandering to the steel industry.
      Obama’s tariffs were pandering to the steelworker union.
      Trump’s tariffs are just pandering to both of these.

      1. “All of the tariffs were just pandering.”

        This is true for all tariffs ever implemented. Any perception of “trade imbalance” implies that trade is a zero-sum game, which it is not.

        1. Reagan, Bish I, Clinton, Bush II and Obama understood that trade is not a zero-sum game.

          To Trump it is, at least in his rhetoric. The interesting thing to me is that much of Trump’s policy position are quite consistent with those of the Democratic Party (especially the old Labor Union wing) thirty to forty years ago. See Walter Mondale’s 1984 campaign. This applies to both immigration and trade issues.

          1. “Bish I” was possibly a president from an alternate history.

    4. I think part of the pushback this time around is twofold:

      First, Trump has been so loud and obnoxious about it. When Bush and Obama did it, it was a small exception to a broader support for free trade generally. With Trump, however, he doesn’t seem to support free trade at all, and he views tariffs as the norm rather than the exception.

      Second, Trump’s supposed justification is that ‘America has been getting a bad deal’, when that’s clearly not the case – which country has the world’s biggest economy again? So his whole mentality is that we are “losing” in terms of trade, which is different than how Bush or Obama framed it.

      1. Trump’s baseline assumption is always wrong

        Examples

        The Iran Deal is a bad deal (how is Nuclear Non Proliferation for Iran “bad”

        The US is a shithole country and only he can make it great again.

        Mexican immigrants are all rapists and killers.

        Tax breaks for corporations will benefit economic growth.

        Obamacare killed jobs.

        He is responsible for the 2009-2018 bull market (ridiculously absurd)

        1. The US is a shithole country

          Of all the outrageous things Drumpf said that should have disqualified him from the Presidency, this might have been the worst. I vividly remember him calling the US a “shithole country” as his supporters defended his remarks, and courageous Democrats like Corey Booker disputed them.

          I guess the upside is that the Republicans are no longer even pretending to be the “patriotic party” anymore.

          1. Yes, he even said the slaves had it better than “the blacks” do now!

        2. “The Iran Deal is a bad deal (how is Nuclear Non Proliferation for Iran “bad””

          Really ironic to read this right after the Israeli intelligence coup that demonstrates just how bad it was.

          And to find out All of this was known when Obama negotiated Iran’s escape from the sanctions, too?

          Basically the Iran Deal was bad because Iran had a covert nuclear program going the whole time, and Obama knew it when he arranged to give them billions in unmarked bills and end the sanctions. Thus allowing them to put it into overdrive.

          1. Bibi the Rat is a known liar and warmonger.

            1. He’s also the one politician whose word we will take over any other. What’s a liar and a warmonger without his stooges, after all.

  2. There’s a pic of Reagan shaking hands with Trump and then some time later Reagan died of a terrible disease. Coincidence? Or is Trump just not germophobic enough considering where those hands have been?

    1. Since Trump can’t seem to get his Stormy Daniels story straight, could it be that it was Reagan who transmitted the Alzhemier’s cooties to Trump?

    2. A guy who rawdogs a pornstar does not get to find refuge behind a claim of germophobia.

      That he does it while his wife is home with a few-month-old makes him a hero the the gullible “family values” crowd.

      That he lies about it makes him a faux libertarian’s dreamboat.

  3. Trump is always ready to take either side of an issue, why shouldn’t all of his minions?

    1. You say that as if people around him had principles to begin with.

  4. The reality is the US’s free trade policies are not being reciprocated by major trading partners, and this puts Americans at a sever competitive disadvantage. I worked in Asia for major consumer electronics conglomerates at a management level. Their markets are 100% closed to US companies, yet they have full freedom to compete in the US. It is completely unfair.

    After WWII when the US was 50% of the worlds manufacturing base we could afford to be very open to allow the world to develop and catch up to the US. This was a very generous thing to do.

    But we are past that, and Republicans are finally waking up to this fact. For the first 150 years of the US’s history the US had tariffs, and they supported the federal government without income taxes. The country did amazingly well during that time period. Given the realities of today’s trade agreements, I have yet to come across a single logical argument not to bring back significant tariffs. This article and the many like it are written for some other alternative universe, but they do not describe the one we currently reside in…

    1. Yes, thus why TPP was so important.

    2. “Their markets are 100% closed to US companies, yet they have full freedom to compete in the US. It is completely unfair.”

      The implication that causing the US consumer to bear the brunt of another country’s bad trade policy is wrong. That’s what retaliatory tariffs do. Tariffs also are a huge distortion to markets. How do you plan your supply chain and pricing on goods when the price of your raw material changes from administration to administration?

      In terms of tariffs vs taxes… would you accept that Congress would cede it’s power to lay taxes to the Executive? Trump’s unilateral action here flies in the face of separation of powers.

    3. ” I have yet to come across a single logical argument not to bring back significant tariffs”

      Okay, here’s one:

      Tariffs are just a manifestation of rent-seeking from politically-connected industries.

      Even if I were to agree that tariffs made economic sense (they don’t) and that they ought to be increased, we would not see an increase in tariffs across the board. They would be enacted so as to favor the powerful and the connected, to the detriment of the powerless.

  5. I don’t think Drumpf gives a hoot about free trade or tariffs. This is all about his political move to focus on poorly educated, low income voters with a simplistic message that says “Your problems are all someone else’s fault, and I’m going to fix that for you.” The real flip for the GOP here is this focus on Trump’s base instead of their traditional educated, upper middle class base.

  6. “Free” trade? – I’m not sure the Republican party has ever fully supported any “Its FREE” idea because most realize NOTHING IS FREE. If U.S. Corporation pay taxes so should foreign companies.

    Until the U.S. has no domestic business and/or corporate tax it is well within its dutiful right to charge tariffs.

  7. I think it’s acceptable to use the threat of tariffs to blow open other markets. The status quo is NOT working for industrialized countries. If you need to follow through on the threat so be it. We’re in the strong negotiating position, not China or any other exporting country.

    Sometimes short term pain is needed for long term gain…

  8. The “free trade” agreements into which the U.S. has entered since the 1950s sacrificed American economic interests in exchange for security interests. American capitalists avoided the repercussions of those agreements because they were able to move their capital overseas and take advantage of the markets the agreements opened up. The American middle class was not so fortunate; as American companies outsourced higher-paying manufacturing jobs overseas, the middle class’ share of the economy grew at a much smaller rate.

    Though the cost of manufactured goods fell as a consequence of outsourcing, the middle class was not positioned to take advantage of the lower prices as well as the poor, whose buying power is subsidized by the welfare state. This globalization, facilitated by trade agreements that favored other nations for the sake of security concessions, contributed to a growing gap in wealth between capitalists and the middle class, which had enjoyed a larger share of the wealth during the heyday of U.S. industry.

    The American middle class perceives that growing gap as a betrayal of its loyalty to the United States. Rightly or wrongly, they believe they are not receiving their rightful share of America’s prosperity, earned by the sacrifices they and their ancestors have made for the sake of their country’s security; the middle class is disproportionately represented among the ranks of the U.S. armed forces, and thus has suffered disproportionate losses in recent wars.

    1. This is a pretty accurate way of putting it. The truth is that once you account for the welfare state spending, which is also paid for by the middle class, I doubt that many imported goods are even any cheaper than if they were produced here. It’s largely all just been a big scam pulled on 3/4 of the country. The upper middle class and above are really the only ones who have seen any benefits, and I think they’re often overstated even for many of them.

      The fact is there are things that are WORTH outsourcing, like something where you cut the production costs by 75% for instance… But much of what we outsource only shaves 10-20% off the cost, and by the time you factor in the lost tax revenue (because like it or not, we have TONS of socialized costs like schools, roads, etc), and the extra spending that would occur within the US if the wages were kept here, extra welfare spending, etc etc etc we’re actually NOT coming out ahead. We’re nowhere near peak employment if you look at workforce participation numbers, and that shows that we’ve basically just made millions of people leeches on the system in lieu of having them do productive work in a low value job like commodity manufacturing…

      What is better for the economy, somebody working… Or that same person getting almost as much money to live out of the taxes those still working have to pay? Obviously there is more net value created in that person working, even if it’s a low value job.

      1. And we are doing a great service in that job creation – for Mexico, in the case of one industry example…

        By 2020, Mexico is expected to build one in four vehicles in a North American industry of 18.6 million units. The U.S. will hold its own at two-thirds of the output, or 12.2 million vehicles. Canada is the big loser, down to 1.6 million vehicles and 9% of the output.

        “In 2014, automakers announced $18.25 billion in additional investments in North America. The breakdown: almost $10.5 billion for the U.S., $7 billion in new projects for Mexico, and a single $750-million project for Canada, according to the Center for Automotive Research in Ann Arbor.

        That is on top of the 18 plants already in Mexico, and there are least five more planned or under construction. Mexico has seen a 40% increase in auto jobs since 2008 to 675,000 last year while the U.S. saw only a 15% increase in the same period to more than 900,000.”

        1. Yup. Of the many things traditional free trade theory doesn’t cover is WHAT IF you don’t have an absolute advantage in enough industries to maintain enough employment to keep your economy functioning and the trade balance close to equal? 3rd world countries don’t want/need to import most of our goods, so we run a deficit.

          Comparative advantage you say? Well, that doesn’t work either. In theory you may still cost more to produce goods than a competitor, but for some reason produce it at a loss and sell it to them to buy your imports that they are better at… Problem is in a market economy companies don’t produce items to sell at a loss to pay for imports! DUH. So this doesn’t happen. Those people are just all unemployed.

          So combined with the welfare state, the fact that we’re a sovereign fiat currency, that means we just run a huge deficit that never self corrects because we can “get away with it” supposedly. We’re selling off our long term value assets as a nation to pay for short term consumption. NOT a good long term move.

          Manufacturing will remain an important part of the economy forever. The jobs provided will shrink with more automation, but there will always be value in producing in your nation versus importing. Retaining that capital in your borders will always be a plus. Germany has something like 20% of their economy based on manufacturing, and they’re not a backwards country… The fact that we threw ours under the bus for no good reason was NOT a smart move.

  9. It seems hard to say Trump himself flip flopped seeing he outlined no trade policy other than re-negotiating the trade deals. I would think to re-negotiate he would need all the tools in the President’s authority toolbox, and yes tariffs would be one of them. Otherwise you would have no leverage to re-negotiate. As for protectionism, yes some industries need to be protected for things like defense We have computer operated military hardware these days, what if you get in a conflict and have no electronics or computer chips to maintain, fix and build military hardware?

  10. Donald Trump’s economic advisers have gone from ridiculing tariffs and subsidies to promoting pure protectionism

    Trump is doing what he promised during the campaign.

    And what he is doing isn’t “pure protectionism”, it is a small number of targeted tariffs.

    So, cut the crap, Reason, and return to some semblance of reality.

    1. The sockpuppet speaks truth. Pussy-grabbing aside, Trump has read and pushed the entire Republican platform, down to its most embarrassingly ignorant and superstitious clauses. The platform did beat the Dem platform promising to import communism & iSlam and ban electric power. Nevertheless, the LP platforms gradually legalized abortion, promoted free enterprise and laid the groundwork for decriminalizing some plant leaves. Libertarian votes defeat bad legislation at least 6x as hard as votes wasted on the two looter parties.

  11. “As the U.S follows other countries down the path of economic nationalism”

    Oh noes!
    USGov might start doing what’s best for Americans broadly instead of what’s best for international corporations!

  12. You’ll learn more about Trump’s objective stop losing the trade war by going to TheConservativeTreehouse.com.

    This article is nonsense.

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  14. The Prohibition Party was also against the protective tariff all during Reconstruction. Then it succumbed to the siren song of Christian National Socialism and the Communist Manifesto Income tax to replace the liquor excise that bribed politicians against banning the Demon Rum. Socialist looting, the theory ran, would enable Mohammedan-syle booze-banning, so in 1908 the Prince of Peace’s own Prohibition Party hitched the water wagot to the looter bandwagon in support of the income tax that would make the world good. Herbert Hoover used the tax as a prohibition enforcement tool via confiscations, and THAT (not the tariff) crashed the economy.
    We should repeal the communist tax first, then champion the revenue-only tariff with Bastiatic vigor.

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