President Trump has imposed tariffs on American allies: Canada, the EU, and Mexico. This Associated Press report contains much food for thought, including the following: “Germany’s Volkswagen, Europe’s largest automaker, warned that the decision could start a trade war that no side would win.”
In November 1988, as his presidency wound to a close, Ronald Reagan devoted a radio address to the subject of trade and its adversaries. One of the things he said was, “We too often talk about trade while using the vocabulary of war. In war, for one side to win, the other must lose. But commerce is not warfare.”
Back to the AP report, which says that the new tariffs “threaten to drive up prices for American consumers and companies and heighten uncertainty for businesses and investors around the globe.”
Our tariffs may be good for someone, however: “The European Union and China said they will deepen ties on trade and investment as a result.”
In 1988, Reagan was an old codger, born in 1911. He knew the Depression, personally. In that radio address, he said, “America’s most recent experiment with protectionism was a disaster for the working men and women of this country. When Congress passed the Smoot-Hawley tariff in 1930, we were told that it would protect America from foreign competition and save jobs in this country — the same line we hear today.”
Reagan continued, “Ever since that time, the American people have stayed true to our heritage by rejecting the siren song of protectionism.” Not all reject it, of course. Not all were rejecting it in 1988. “Protectionism,” said Reagan, “is being used by some American politicians as a cheap form of nationalism.”
That line is fresh as a daisy — as are these:
“Our peaceful trading partners are not our enemies; they are our allies. We should beware the demagogues who are ready to declare a trade war against our friends — weakening our economy, our national security, and the entire free world — all while cynically waving the American flag.”
One more blast:
“The expansion of the international economy is not a foreign invasion; it is an American triumph, one we worked hard to achieve, and something central to our vision of a peaceful and prosperous world of freedom.”
In his Democratic response, Congressman Bill Gray of Pennsylvania said, “We need open trade, but we also need fair trade and a level playing field.” We can all sing these words — make the various arguments — in our sleep.
You can say this for our current president, Trump: He is true to his word, certainly on the subject of trade. He campaigned as a protectionist, and he has been one his entire life. On other subjects — immigration, for example — he has zigged and zagged, but he has stayed true to his protectionist faith on trade. He promised the public tariffs, and he has delivered them. Earlier this year, he said that “trade wars are good, and easy to win.” This will be put to the test, once more.
It is important for free-traders to argue for their position, and not to assume they don’t have to do it, after hundreds of years of human experience. In his radio address, President Reagan talked about that important year, 1776. He said,
“. . . a Scottish economist named Adam Smith launched another revolution with a book entitled ‘The Wealth of Nations,’ which exposed for all time the folly of protectionism. Over the past 200 years, not only has the argument against tariffs and trade barriers won nearly universal agreement among economists, but it has also proven itself in the real world, where we have seen free-trading nations prosper while protectionist countries fall behind.”
So what? The case has to be made again and again, certainly for the young, and also for the less young. Protectionists aren’t shy about asserting their propositions. On the contrary, they are bold. Advocates of trade should be no less so.