The U.S. presidential campaigns of Bernie Sanders and Donald Trump have brought trade tensions to a new height. And the Brexit vote for Britain to leave the European Union has added an international coda to these lyrics. Sanders’ opposition has been longstanding, given his political orientation. Trump’s denunciations of trade started strong with his suggestion of a tariff wall against China and have only grown stronger, reflecting his pursuit of disenchanted voters among the working class. Together, they also have drawn Hillary Clinton into an anti-trade posture. Is this just election year politics, or is it a more fundamental shift in public attitudes toward trade?
To some extent, anti-trade rhetoric flares up in most presidential election years. Candidates from both major political parties make growing and protecting American jobs cornerstones of their stump speeches. The North American Free Trade Agreement in the 1990s and China more recently have been easy “poster children” for job loss, flat wages and economic insecurity.
Traditionally, once in office the president takes a more measured approach. Antidumping and countervailing duty defenses are dusted off but applied judiciously, while at the same time public pronouncements reaffirm that globalization is a fact that America must engage with rather than run from. Economists line up defending the benefits of trade in the form of greater consumer well-being — lower prices, greater choice and more competition. They note that, while some manufacturing activities are lost, new ones — often of higher value — are gained as supply chains grow more integrated and complex. Where some workers, industries and communities suffer, there is support — generally more tepid than it should be — for adjustment assistance. Such programs are intended to help workers acquire new skills, companies to re-tool and communities to rebuild. Unfortunately, these safety nets for those hurt by the inevitable adjustments trade — and technology — bring have been poorly designed and meagerly funded. As a result, in the Great Recession more displaced workers took disability benefits or otherwise dropped out of the workforce.
So, the benefits of trade are diffuse, incremental and hard to measure. The costs of trade are concentrated, significant to those who must bear them and easy to see and dramatize. This sloped political equation and the failure of public programs to offset the costs of change seem finally to have built up an irresistible momentum.
The problem any president will confront once in office is the difficulty and high cost of trying to create jobs through protectionist trade policies. Renegotiating past agreements to make them more advantageous to the United States is a political non-starter for America’s trading partners. If the United States unilaterally escalates tariffs or other barriers to imports, American living costs rise, eventually undermining U.S. global competitiveness (or in the emerging world of robots, accelerating job losses to machines as companies struggle against rising wage pressures). And unilateral protection leads inevitably to retaliation; the Smoot-Hawley tariffs of the Great Depression era were supposed to have taught that lesson once and for all.
China’s central role in today’s trade rhetoric adds a geopolitical dimension to any presidential decision. To turn down the Trans-Pacific Partnership leaves key Asian allies more, not less, exposed to China’s rising influence. Unilateral actions against Chinese exports would likely fan the flames of rising Chinese nationalism while undercutting U.S. exports to China, especially including agricultural exports. For these reasons, U.S. presidents tend to govern in the trade sphere with a more open hand than the closed fist of the campaign trail. The anti-trade tone of this election season, however, has emerged earlier, been more strident and seems more broadly appealing than in any time in recent memory.
So, those who believe that trade may be a great force for good face a steeper hill to climb than in the past. They need to develop better and more generous policies for those displaced by trade — and by technology. They also need to re-frame the roles that trade and technology play in the economy in ways that make their benefits more widely available. Otherwise, the fruits of those forces of change will be replaced by a more bitter tasting protectionism than Americans have known for a long time.