President Trump’s view of global trade is so bizarre, risky, uninformed, misguided, and self-destructive that I periodically try to maintain my sanity by reviewing the wisdom of one of America’s greatest presidents.
- Ronald Reagan’s remarks in 1985 about the self-destructive impact of trade barriers.
- Ronald Reagan’s remarks in 1988 about the economic benefits of trade liberalization.
Today, let’s travel back to 1982 for more wisdom from the Gipper.
What’s especially remarkable is that Reagan boldly defended free and open trade at the tail end of the 1980-82 double-dip recession that he inherited.
Many politicians, facing an unemployment rate above 10 percent, would have succumbed to the temptation for short-run barriers.
But just as Reagan did the right thing on inflation, even though it was temporarily painful, he also advocated good long-run policy on trade. He understood Bastiat’s wise insight about “seen” benefits vs “unseen” costs.
Trump, by contrast, has a very cramped and limited understanding of trade. Which is why almost all economists disagree with his approach.
…on Trump’s other point — that protectionism offers Americans the road to riches — most specialists in international trade would beg to differ. “Even by Washington standards, Trump’s tweet was profoundly wrong,” said Daniel J. Mitchell, a conservative economist.
In a recent column criticizing Trump’s tweet, Mitchell wrote, “The last time the United States made a big push for protectionism was in the 1930s. At the risk of understatement, that was not an era of prosperity.” …said Lawrence White, a professor at New York University’s Stern School of Business…”tariffs, like any tax, generally introduce an inefficiency and makes the two sides of the trading relationship poorer — not richer.”
I appreciated the chance to be quoted in the story, and I also was happy that a link to one of my columns was included.
Though I gladly would have traded that bit of publicity if Politifact instead had shared my “edits” to Trump’s infamous “Tariff Man” tweet.
I’ll conclude by noting that Reagan’s record didn’t always live up to his rhetoric.
P.S. I winced when Reagan positively cited the International Monetary Fund in his remarks. Though maybe the IMF in the early 1980s wasn’t the pro-tax, anti-market, bailout-dispensing bureaucracy that it is today.
P.P.S. I noted that Reagan was one of America’s great presidents. I also include Calvin Coolidge and Grover Cleveland on that list.
International Liberty 
[…] Click here, here, and here for some very sound observations from America’s best post-WWII […]
[…] cuts. What we need is the full market-friendly Reagan agenda of spending restraint, deregulation, trade expansion, and sound […]
[…] cuts. What we need is the full market-friendly Reagan agenda of spending restraint, deregulation, trade expansion, and sound […]
[…] Click here, here, and here for some very sound observations from America’s best post-WWII […]
[…] President Reagan, I believe in free trade rather than […]
[…] Like President Reagan, I believe in free trade rather than protectionism. […]
[…] President Reagan, I believe in free trade rather than […]
[…] score on trade declined during the 1980s. In his defense, I’ll point out that Reagan believed in free trade and he was the one who started the negotiations that led to both NAFTA and the WTO. So I would […]
[…] And if you need more evidence, look at what Reagan said about trade here, here, and here. […]
[…] I much prefer Reagan’s approach to trade (see here, here, and […]
Dan- The only thing I would comment on is that there is a need to balance the regulatory tables. If OSHA and EPA are so important to us, are they not important to those we trade with? Or is it OK if kids from other countries work in dangerous sweat shops and breathe filthy air? Perhaps with a little bit of balance in regulations, the prices of goods would not be so imbalanced. And tariffs would not be attractive. SO, if Trump would state it this way i.e. “you will receive tariffs in the amount of the financial gain you realize for not adopting our regulatory environment” then I think more people would HAVE to support them.
Tariffs and protectionism seem similar to communism in that for some reason despite history ppl. think that the right tariffs haven’t been tried and that protectionism can be made to work. Trump both wants protectionism and to make legal immigration vastly less (except of course for workers for his hotels, he has expanded that visa category). I don’t see where all the machinists, etc. are going to magically come from. Moreover, every time a country tries this sort of protectionism, regardless of reason (unfair trade, protecting jobs at home, etc.) it has made the country poorer. I get, though, that America First can sound so great to ppl., and protectionism propaganda is very compelling, but look at countries like Venezuela and you can see why it’s a bad idea long term.
I understand the economic argument. However, in an era of high taxes, shouldn’t we consider that China’s growth over the past 30 years, has something to do with those high taxes making our products uncompetitive.
True we are receiving low cost imports, but at a long term cost of hollowing out our underlying strength. That is the actual situation, not theory.
Consider territorial taxation, which you supposedly support. If everything made in the US is subject to individual and corporate taxes, shouldn’t we drop all tariffs but then add on the missing tax to imports? The easiest way to do that would be to make imported products or components a non-deductible expense.
The argument might be “tax competition”, but US exports don’t correct for taxes on exports, where many of our competitors drop taxes.
We will regret building up Red China. They are not our friends. They are certainly no friends of liberty and freedom and human dignity. Free Trade with enemies of freedom is suicidal to the cause of freedom. Kind of like the same way that Open Borders are destructive of the liberty that Libertarians claim to care about so much.
I’m thinking that the error of the Libertarians is that they mistake Good Principles for being something that people can naturally understand and appreciate in their state of nature. Sure, Free Trade and Open Borders are great, when the whole world appreciates Liberty and Freedom and Human Dignity. But in the real world which is full of psychotic megalomaniacs and diabolical arch criminals, not so much.