Not since the end of World War II has international trade policy been so central to global politics for such a sustained period of time. As a presidential candidate, Donald Trump campaigned against trade agreements, winning the election with the support of midwestern states devastated by the loss of their manufacturing base. The United Kingdom’s decision to leave the European Union was motivated in part by a sense that decisions affecting its domestic economy should be made in Britain, not Brussels. Across Europe, right-wing parties skeptical of the international institutions that have promoted and supported trade liberalization are enjoying electoral success not seen since the 1930s.
These events have initiated yet another round of clashes in the long-running battle between self-described free traders and so-called protectionists. But their debates have proven tired at best and counterproductive at worst. For one thing, neither side believes in truly free trade or true protectionism. Both recognize that trade has had significant consequences for the distribution of wealth and that, at the same time, many communities depend on export markets.
Meanwhile, policy elites on both sides have tried to distance themselves from the fray, subscribing instead to a modern consensus in favor of ever more trade liberalization, and they continue to invoke economic growth as the primary justification. To the extent individuals lose jobs or find wages suppressed by overseas competition, the argument goes, new, better-paying jobs will be created elsewhere in the economy, while the overall gains can be used to compensate the losers.
The bipartisan acceptance of this justification is baffling. In domestic economic policy, trickle-down economics has become a pejorative term. Few believe that simply cutting taxes, for instance, creates widely shared benefits. Instead, debates about tax reform are driven by arguments about winners and losers, not overall benefits to the economy. Yet in international economic policy, a bipartisan consensus has until recently favored cutting trade barriers such as tariffs, which are simply taxes on imported products, and letting the market
Loading, please wait...