Donald Trump loves walls and he loves tariffs, which are walls of another kind – barriers to open trade. In his mind, walling off the outside world is the key to making America great again.
From this warped perspective, his decision last week to slap tariffs on steel and aluminum imports makes perfect sense. But it has provoked strenuous objections from Republican and business leaders and most economists, not to mention U.S. allies and trading partners.
All this political blowback looks like a gift to Democrats, but there’s a hitch: The party doesn’t know its own mind on trade. Polls show sizeable majorities of rank and file Democrats favor free trade. But the national party’s message is dominated by a militantly anti-trade faction led by organized labor, Rustbelt politicians and left-wing populists. This group, in fact, seems to be offering the only praise for Trump’s tariffs.
“This is a great first step toward addressing trade cheating, and we will continue to work with the administration on rewriting trade rules to benefit working people,” said AFL-CIO President Richard Trumka.
If anti-trade Democrats are embarrassed by the fact that their views are indistinguishable from Trump’s fact-free demagoguery, they aren’t letting on. Both take the conspiratorial view that trade deals engineered by self-dealing elites, rather than technological change and automation, are responsible for the loss of manufacturing jobs. If so, it must be the most successful conspiracy in history, since deindustrialization has happened all across the developed world since the 1970s.
Some liberals, however, are troubled to find themselves in bed with “economic nationalists” like Wilbur Ross, Peter Navarro and Stephen Miller, and their cognitive dissonance leads to some contorted logic. Robert Kuttner, for example, contends that Trump is right to levy tariffs on foreign steel and aluminum “that threaten to wipe out what’s left of domestic industry.” But because Trump’s tariffs don’t focus on the real culprit – China -- they are a “dumb variant of a long overdue policy.”
Trump, who has boundless faith in the power of tariffs to “bring back” factory jobs, rejected targeted tariffs in favor of an across-the-board approach. This put Canada, Brazil, South Korea and Mexico in his cross-hairs, but not China, which supplies a mere 3 percent of U.S. steel imports. Yet China is the worst offender when it comes to dumping excess steel production into world markets.
Trump reluctantly bowed to entreaties that he exempt Canada and Mexico from the tariffs. But characteristically he tacked on an insulting proviso: The tariffs go back on if our neighbors refuse to make concessions to the United States in ongoing talks over updating the North American Free Trade Agreement (Nafta). This blatantly extortionate policy will likely have the opposite effect, inflaming anti-American sentiment in Canada and Mexico and leaving their negotiators less room for maneuver.
Rather than parroting Trump’s anti-trade populism, Democrats should vigorously oppose both his blunderbuss tariffs and his bullying campaign to unilaterally revise Nafta. They can take comfort in the fact that such populism actually isn’t all that popular.
According to a new Quinnipiac poll, U.S. voters oppose the Trump tariffs by 50-31 percent. By 53-34 percent they disapprove of the way Trump is handling trade, and nearly two-thirds disagree with his claim that a trade war would be good for America. Only 26 percent think tariffs would be good for U.S. jobs.
Democrats overwhelmingly (73%) object to Trump’s tariffs. This is consistent with other polls that show solid Democratic support (67%) for the proposition that trade agreements are good for America. In Washington, however, the anti-trade faction calls the tune by threatening to withhold campaign support for pro-trade Democrats.
This is a big problem for Democrats. Many more workers are employed in steel and aluminum consuming industries – which would pay more under the Trump tariffs -- than in producing these metals. By one estimate, tariffs would cost the U.S. economy five jobs for every one added in steel and aluminum production, for a net loss of nearly 146,000 jobs. Most of those lost jobs would be in production and low-skill positions.
Democrats are right to empathize with Rustbelt communities that have seen good jobs and a whole way of life vanish. They need more help, but protectionism that costs other workers their job is no solution. Moreover, Democratic compassion shouldn’t be confined to the narrow subset of U.S. workers employed in steel and aluminum production. The party also needs to look out for U.S. autoworkers who make cars with Canadian steel, black dock workers whose jobs depend on busy ports, and clean energy workers installing wind turbines. All told, some 41 million Americans depend in one way or another on trade for their livelihood.
Most important, Democrats should eschew the Trumpian narrative of “tombstones” and victimhood in favor of a forward-looking and hopeful plan for creating a more dynamic and inclusive knowledge economy. Instead of protecting narrow sectors of the economy, they should concentrate on spreading digital innovation and entrepreneurial job creation to distressed communities left behind by economic change, both in the inner cities and in rural and small town America.
That doesn’t mean Democrats should tolerate systematic abuses of free trade rules – which brings us back to China. Hopes that engagement would encourage China to liberalize its political system as well as its economy are fading as Beijing slides back into dictatorship under Xi Jinping. Washington needs a more assertive policy that cracks down on China’s policy of technology theft or expropriation, and takes account of massive state subsidies that flow to domestic industries.
In some cases, the remedy might include higher tariffs – on China. Democrats shouldn’t collude in policies that punish America’s democratic friends and allies for China’s mercantilist sins. What’s more, genuinely free trade can be a potent strategic weapon for the United States as it vies for influence with an increasingly self-assertive China.
That’s what President Obama had in mind when he pushed for creation of the TransPacific Partnership (TPP). His idea was to create a vast free trade zone in the world’s fastest growing region that would exclude China and act as a counterweight to its enormous economic clout. In one of his first acts as President, Trump foolishly took America out of the TPP, diminishing U.S. influence in Asia.
In a sad irony, the other 11 Pacific Rim countries Obama had been negotiating with put TPP into effect last Thursday, the same day Trump announced his tariffs. If Democrats really want to contain China’s hegemonic ambitions in Asia, they should make joining TPP a key plank in their platform.
America doesn’t need two protectionist parties. Democrats ought to stand for economic openness and freedom, and leave the building of walls and trade barriers to Donald Trump.