America was born as a maritime nation and grew to become a hegemon. Our grand strategy can’t and shouldn’t aim at isolation.
America was born as a maritime nation and grew to become a hegemon. Our grand strategy can’t and shouldn’t aim at isolation.
T rade is commerce. Commerce is money, jobs, and prices. The economic case against high “protective” tariffs is well known. But foreign trade is never just about economics. It’s also about our grand strategic vision for our place in the world.
If so, what exactly is the Trump team thinking? I’ve written about the strategic folly of launching a global war on trade with no clear adversary, no identified victory conditions, no allies, no exit strategy, and a vast overestimate of American capacity to “reset” the entire global economic order. The odds against success are steep, and the perils many. But even aside from that, step back and consider this at the level of grand strategy. What sort of new world order do Donald Trump and JD Vance think they are creating?
Partners in Freedom
A major critique of the current regime of open American markets is that trade with the People’s Republic of China has empowered and enriched a malignant Chinese tyranny that represses its people, menaces its neighbors, and means us ill. There is merit to this argument. The PRC has spent its expanded wealth on a defense buildup that threatens Taiwan and challenges our supremacy on the high seas. It pours resources into initiatives to ensnare nations across the Southern Hemisphere into its web of influence. China’s economic interdependence with the United States, rather than liberalize the Chinese Communist Party, has seduced and extorted big American companies, Hollywood studios, and the NBA to become the party’s propaganda arms. During a pandemic birthed from a Chinese state laboratory, we found ourselves supplicant to China for medical supplies. In a future war, we could find ourselves in the same position with regard to war matériel. We don’t want to end up like the British officers in 1861 who discovered that they could organize the defense of Canada against the United States only by taking American railroads to get there from Boston.
But if the problem is that free trade makes China rich and dangerous, why are we punishing Taiwan, when China’s conquering it would strengthen the PRC? Why is the White House, amid a crackdown on foreign trade, protecting the Chinese-owned ByteDance from congressionally mandated divestment in TikTok? Why are we punishing countries such as Vietnam, which have stolen jobs from China, and pulling up the drawbridge against the allies we would need if we ever found ourselves in a direct confrontation with the PRC?
More broadly, if the problem is that we’re indiscriminately using free trade to benefit our own consumers in the short term rather than strategically using it to strengthen our global position in the long term, then slapping higher tariffs on our friends than on our enemies — hitting Israel and Ukraine harder than we’ve hit Russia or Iran or Afghanistan — is positively counterproductive. Yet that’s what the second Trump administration is doing.
The grand strategic benefit of free trade, if it is applied selectively rather than across the board, is to create economic communities of interest among nations that have like-minded systems and/or common strategic interests. The great foreign policy impetus for the growth of an American-led free trade order after World War II — as well as Europe’s post-WWII impetus for the growth of a common market — was to bind together the free nations of the world by commercial ties that would strengthen their military alliances as well as enrich their people. That was good economics, and it was also good grand strategy. The effort to bring China into that fold in the 1990s was well intentioned, but it lacked that unity of purpose in the absence of great-power rivalries.
But the second Trump administration now acts as if the objection to trade with China is not China but trade itself, with friend and foe alike. If the problem is not that the Chinese regime is particularly malignant but instead that every American ally must pay in steady cash for our protection, then we have abandoned the path of strategy in pursuit of a pure economic ideal — just a different and wrongheaded one.
The Founders’ Free Trade Zone
The political as well as economic benefits of free trade were not lost on our nation’s founders. America was born as a maritime nation, not a mountain fastness or an empire of the steppes. We often hear invocations of Alexander Hamilton’s view of protective tariffs, but as with Ronald Reagan’s occasional steps toward protectionism in specific contexts, this misses the forest for the trees. The Founding era was one of massive destruction of American trade barriers domestically and abroad, just as the Reagan era laid the foundations for the North American Free Trade Agreement and the World Trade Organization. The trend in both cases was toward expanding rather than constricting trade.
The men of the Founding generation were born subjects of a great mercantile empire. They didn’t have the benefits that we can draw from long study of economics, a field then in its infancy: Adam Smith’s Wealth of Nations was published only in 1776 (in time for first editions to be snapped up by George Washington and Alexander Hamilton), and David Ricardo didn’t begin writing on the subject until after Washington’s death. Britain itself did not become the global champion of free trade until well into the 19th century.
The Boston Tea Party, one of the key triggering events for the American Revolution, was partly a protest against crony capitalism in the British government’s grant of a monopoly on tea imports to the corrupt East India Company — a classic illustration of how the benefits of protective trade policies tend to flow to bailouts of well-connected companies. But it was also a protest against tariffs. Americans had to import tea, which was not produced domestically; even today, nearly all tea is grown in a handful of countries in Asia and Africa. American colonists protested when imported tea was taxed by the Townshend Acts in 1767 — they understood that tariffs were taxes and therefore that this was taxation without representation. The Tea Act aimed to crack down on competition from untaxed tea brought into the colonies by smugglers — in other words, to end free trade in tea. Americans responded by boycotts and by dumping tea into the harbor rather than let Parliament pass the cost of tariffs on to American consumers. From that protest, a free nation was born.
The revolution, the Constitution, and the Washington administration collectively swept away vast barriers to trade:
Trade among the 13 colonies was highly restricted. Products, especially manufactured goods, were subject to punishing taxes and tariffs when they weren’t banned from inter-colonial trade entirely. . . . States under the Articles of Confederation still acted as if they were separate sovereigns. The Constitution itself abolished these restrictions, banning states from imposing tariffs or taxes on imports or exports and reserving to Congress the regulation, at the national level, of interstate commerce. The early republic saw the creation of a true national market with no internal barriers to trade. Given its size — the new nation was 70 percent larger than France in 1783, and doubled in size in 1803 — that alone spawned a geographically vast free-trade marketplace unequaled anywhere in Europe until at least the 1850s.
This was an enormous and colossally successful experiment in free trade, which did much not only to make America more prosperous but also to bind the states together into a single nation. That was Washington’s strategic vision. The new nation also threw off mercantile restrictions on its foreign trade:
Under the Navigation Acts, trade from the colonies had to be carried only in British-flagged ships, and many agricultural products could be shipped only to Britain — even if better prices were available in other markets. Similarly, Americans could buy the products of other countries only if they were sold through Britain as a middleman. There were even tariffs on exports to Britain, in spite of its exclusive right to buy American produce. The resulting system was a dead weight on American economic activity.
This is the context of the early republic’s tariffs on the other great Atlantic powers, such as France and Spain: before independence, much of that trade was simply banned. Taxed trade may not have been free trade, but it was freer than no trade at all. It enabled the growth of our merchant marine. By 1853, it even led us to compel Japan to trade with us. Similarly, Hamilton’s desire to protect American industry from British competition should be understood against a backdrop of harsh colonial restrictions on American competition with British industry:
Besides the restrictions on trade, colonial manufacturing was directly restricted by British mercantilist policies that aimed to keep the American market dependent upon imported British manufactures. Americans were barred from manufacturing products that might compete with the British, and banned from building certain types of facilities such as mills, forges, and furnaces. There were onerous occupational licensing rules and, at times, orders to stop planting crops such as tobacco. The Revolution swept away all of that, leaving Americans free to make and sell whatever they could.
A World Without Allies or Friends
There’s no substitute in international affairs for the ability to tell the difference between your friends and your enemies. And yet that seems to be exactly the difference that Vance and other like-minded Trump advisers want to eradicate in our policies — and the president is going along with them, reversing the largely successful grand strategic direction of his first term.
Perhaps the key to the administration’s thinking can be found in Vance’s complaint that we need to escape a world where “if the small island of Taiwan fell to an invasion, we’d be hurled into a Great Depression.” The argument here is not that America should use trade to bind itself closer to friends and allies but that having allies and trading partners is a problem because you might need to defend them someday. In this telling, what the United States needs is to decouple itself not from enemies but from everyone.
If that is the goal of the big, dramatic, unilateral remaking of the entire world economic order that Vance envisions, the entire concept of treating China differently from Canada, Britain, or Israel is a discarded paradigm. But American autarky was an unrealistic utopia in the time of the Founders, and it has become only more so since.
Trade Wars Will Come for You
The era of the French Revolutionary Wars and the Napoleonic Wars dramatically illustrated how hard it was to develop economic policies that would be totally immune to shock waves created by international conflicts and their impact on global trade, even in the Age of Sail. The largest victim of those wars was Spain: “Before independence, Mexico produced 80 percent of the world’s silver and gold; its silver mines alone represented more than 20 percent of Spanish revenue. The British blockades of the Napoleonic era wrecked Spain’s cotton exports, which were supplanted by the American South and its cotton gin after 1793.” The ripples went far and wide: the Qing dynasty in China, at the apogee of its power in 1793, suffered the destabilization of its silver-based currency from the long interruption in Mexican silver, which left the empire’s money supply unable to keep pace with its population growth, helping to usher in China’s disastrous 19th century.
With Spain’s vast cotton exports shut off, American cotton exports grew explosively, driving the settlement of Alabama and Mississippi (and deepening the nation’s investment in slave labor). But the ripples of the Napoleonic Wars didn’t end there. In the 1790s, French depredations against American shipping triggered the Quasi-War, an undeclared armed conflict that John Adams (who had no desire for foreign military adventures) was able to contain with a negotiated resolution only after years of war hysteria, the legal relics of which (such as the Alien Enemies Act of 1798 and the Logan Act of 1799) are still with us. We also benefited in 1803, when the side effects of war led France to sell us the vast Louisiana Territory.
Yet the pressures on American shipping didn’t subside. Thomas Jefferson, in a Vance-like effort to wall off America simultaneously from both sides in the war, pushed through the Embargo Act of 1807, which cut off all foreign imports (with some exceptions: there are always exceptions) in an effort to end hostilities with Britain and France. It proved to be (at least until now) the worst economic policy decision by any president. It devastated American shipping and shipbuilding, threw thousands of people out of work, and probably led to about a 5 percent drop in GDP. Jefferson ended up signing its repeal just 14 months later, but it had significantly soured his popularity after a smashingly successful first term. Yet the ripples on American policy continued, leading to the drift into the War of 1812 to protect American shipping.
On the other side of the Atlantic, Napoleon’s effort at autarky — his “Continental System” — was even more disastrous. Straining under British blockades, he tried to seal off continental Europe to external trade and create a mercantile empire for France inside of Europe. This ended up generating resentment toward France, as many German states lost markets for their industrial goods and an increasingly impoverished Italy was unable to meet the expected demand for imports from France. It also generated conflict with Russia, whose export economy was hobbled by its inability to sell raw materials to the British market, while the British blockade made maritime trade between France and Russia impractical. The result was the end of France’s détente with Russia and Napoleon’s catastrophic invasion of 1812. The Continental System was a major factor in assembling the final coalitions against France that destroyed Napoleon. Fighting a trade war on every front at once was too much even for the greatest of military geniuses.
Protectionism has its own domestic political costs. In 1832, the United States almost unraveled when South Carolina tried to nullify a tariff that was seen as benefiting the North at the expense of the export economy of the South. In 1846, the British Conservative Party imploded into a bitter schism when aristocratic defenders of the protective Corn Laws resisted their repeal even though they drove up the cost of bread for industrial workers and exacerbated famine in Ireland. In both cases, the original decision to get the political system involved in selective protection failed to consider that protection had losers at home as well as winners.
A nation that thinks it can benefit at home and reduce its exposure to foreign conflicts by walling off its markets will soon discover that there is no refuge from the world. No American grand strategy that does away with friends and allies can magically prevent us from having enemies — enemies who are all too quick to build their own bridges where we have burned them.