Trump often says that he is a free trader. He said it again in Indiana with Mike Pence this week:
“I’m not an isolationist. I’m a free trader,” Trump said. “But I’m a free trader to make great deals, not make horrible deals. I know free. I know fair. I know every form of trade known to mankind. Here’s my definition of trade: My definition of trade is that I want to make great deals for the American people. You can call it whatever the hell you want.”
When he is speaking in this vein, Trump is in the mainstream of the trade-policy tradition both parties have followed for decades. That tradition does not make the classic economist’s argument for free trade, which incorporates the benefits of imports and the competition they bring. Instead it recruits mercantilist premises to the service of liberalizing trade: We (regrettably) open our companies to competition from imports, but in return our companies get an opportunity to export, and we come out ahead; if other countries have trade barriers against our exporters or otherwise treat us unfairly, we will threaten them with trade barriers of our own to get them to back down. Much of what Trump is saying consists of promising to pursue this approach more aggressively: He’ll strike better deals and force other countries to play fair, because unlike the members of our political class he’s not a chump.
Some of Trump’s rhetoric is, on the other hand, flat-out protectionist. In Indiana Trump also reiterated his promise to make Carrier air conditioners face tariffs because the company moved some furnace production from Indiana to Mexico. The costs of this kind of protectionism are well-known.
But let’s take Trump at his most frequent word, and assume that the general thrust of a Trump trade policy would be to pursue free trade on more advantageous terms, with “more advantageous” defined in a mercantilist way: We gain more export opportunities than we usually do in return for exposure to competition.
There are many ways this approach could go wrong, with the worst-case scenario being a trade war that harms all economies involved. On the best-case scenario, Trump would reach terrific bargains that would avoid the costs of protectionism. Tariffs wouldn’t go up at home or abroad: Rather, our threats to raise tariffs would make other countries bring theirs down and so we wouldn’t have to make good on the threat. Deals would be made lowering other countries’ trade barriers much more than ours. These are the outcomes that the fair-trader version of Trump would seek.
But those outcomes wouldn’t deliver much succor to workers who are losing ground because of competition. We would have more exports, not fewer imports. And the winners from the new export opportunities would in a lot of cases be different workers, companies, and communities than the losers from import competition. Economic activity would still shift from industries where the U.S. has a comparative advantage, and away from those where it doesn’t.
Past performance suggests that any jobs saved through protectionism come at an extremely high cost. (Obama’s tariffs on tires cost at least $900,000 per job saved.) “Better deals” would avoid those costs, but they also wouldn’t protect anyone.