Jumping From the Free Trade Ship to the Protectionist Fair Trade Ship

By Veronique de Rugy

June 7, 2018 5 min read

Are there any free market principles Republicans won't abandon at the altar of political expediency? They certainly have long stopped standing up for fiscal responsibility, and though they held on to their free trade principles for some time and seemed to understand that trade "remedies" (such as tariffs) mostly hurt the American people rather than foreign exporters, that didn't last long after Donald Trump took office. It's astonishing what the Trump presidency has done to the GOP's position on trade.

But really, this all started during the presidential campaign, when Trump's constant railing against trade and trade agreements seemed to prod other Republican candidates, such as Sens. Marco Rubio and Ted Cruz, to talk about "fair" trade (protectionism) as opposed to "free" trade.

Now that he's in office, Trump has followed through with a comprehensive protectionist agenda — threatening foreign governments with a multi-front trade war, which he claims will be easy for us to win. Most recently, Trump imposed stiff tariffs on steel and aluminum against, among others, the European Union, Canada and Mexico — which may be followed with tariffs on automobiles. Adding insult to injury, he's justifying his actions by claiming that imports of steel and aluminum — and automobiles, for that matter — from these countries "threaten to impair the national security" of the United States. Never mind that six of the top 10 providers of steel to the U.S. are our NATO allies and closest friends.

In the face of a diplomatic backlash and a likely negative economic impact, the Republicans in Congress are doing nothing. It's not because they lack the power; they lack the backbone. Beyond condemning the president's erratic and counterproductive actions, they could pass legislation to reverse the imposition of tariffs. They could also reclaim some of the authority they delegated to the president to impose tariffs, as a few, including Sens. Mike Lee and Ron Johnson, have suggested.

Unfortunately, if the past few months are an indication of where Republicans' heads are at, they'll not only do nothing but even go out of their way to rationalize the Trump administration's trade policy.

Consider House Majority Leader Kevin McCarthy. Appearing on a bunch of Sunday shows recently, he argued not only that tariffs on European and Canadian imports had to be levied in the name of free trade but that they were also a sign that the United States is "standing up for the process." Such comments would make those of us who understand economics laugh — if we weren't so sad.

McCarthy is misleading the American people when he claims that imposing tariffs is an effective way to persuade other countries to lower their own tariffs. That's unlikely. The way the United States got other countries to lower their trade barriers in the past was by being decisively pro-free trade. Leading by protectionism will only lead to more protectionism.

McCarthy is also deceiving the American people by pretending that these tariffs will punish foreign governments for their protectionist tendencies. These tariffs will jack up the price of producing goods made with steel within the United States. That will make it more difficult for U.S. manufacturers to compete with foreigners who make goods out of steel without the added cost of tariffs. This will result in thousands of lost U.S. manufacturing jobs at the hand of the Trump administration and a lapdog Congress that apparently has not learned from the past.

McCarthy's spin that the Trump administration is "standing up for the process" through tariffs is even more laughable. The national security argument is bogus when levying tariffs against our NATO allies. In fact, during a U.S. Department of Commerce investigation, the Department of Defense wrote a letter to say that no tariffs were needed to protect national security and that the DOD's military needs are fulfilled by only 3 percent of the domestic steel production.

But that expert opinion didn't stop the Trump administration from labeling NATO allies' steel imports a threat to our national security. The dangers of Trump's move will become very clear when those former allies drag our protectionist leaders before the World Trade Organization and the United States loses as experts predict we will.

Many of us have long surmised that the Republican Party stands for little more than low taxes, but at least it used to show some sort of commitment to free trade. Not anymore.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. To find out more about Veronique de Rugy and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at www.creators.com.

Photo credit: at Pixabay

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