For Dems, It’s Difficult
Free Trade: it’s the idea that the world’s trade should be unfettered by borders and nations. Free traders believe that ultimately American industry will win out, despite higher wages and costs, because we are more inventive and efficient. It’s been a Republican core value since Dwight Eisenhower beat Bob Taft for the 1952 Presidential nomination – that’s a long time (Washington Post.)
The opposite of free trade is protectionism: the idea that American industry can’t maintain the standards of higher wages and benefits, without putting barriers to competition from other countries. Tariffs – taxes on imports – have been put forward for years as a way to protect American heavy industry, particularly steel and aluminum. The supporters of protectionism have been those that supported the “workers,” particularly the unionized workers who faced foreign competition. In other words, the supporters were the Democrats.
So now President Trump has threatened $60 billion worth of tariffs on goods from China, with an additional $100 billion in the works. China is responding by targeting equal tariffs against American goods. Where are Paul Ryan, Mitch McConnell and the rest of the “establishment” Republicans? Nowhere to be found as they remain silent to the President’s plans. But Senator Sherrod Brown of Ohio, a Democrat representing the old steel workers of Youngstown and Cleveland is quietly supporting the President’s move. Life is complicated.
There are legitimate arguments on both sides of the issue. Protectionists argue that the Chinese government has “put their thumb on the scale” by helping to finance industries competing with the US, by paying workers low wages with little benefits, and by allowing rampant theft of intellectual property (read that: computer programs, videos, music, patented processes.) That’s all true.
The problem with tariffs is that it doesn’t stop the import of goods, it simply raises the cost of those goods to the consumer. By raising the cost, it makes more costly American goods competitive in price. So what tariffs ultimately do is raise the price of goods, passing the increased costs onto the consumer. The United States is one of the greatest consumer nations in the world, so clearly our costs will go up.
That’s cost for things like: John Deere equipment (steel), Budweiser Beer (aluminum for cans) and flat screen TV’s; all likely to go up significantly (1300 proposed products, New York Times.) Whether that serves the Democratic purpose of re-invigorating the US steel industry, with all of the capital costs restarting steel plants entails, remains to be seen. What is for sure: the cost of buying lots of things is going up.
In addition, the Chinese are returning the favor. Tariffs on soybeans, Kentucky whiskey, American cars, trucks and motorcycles; all are likely to reduce the amount of those goods that are sold to China, putting their industries in a bind. These tariffs are nicely politically targeted: Kentucky Whiskey (McConnell) and Harley-Davidson (Wisconsin, Ryan) as well as soybeans (Iowa farmers) and tobacco (North Carolina.) To an Iowa farmer, living on a small margin, selling fewer soybeans and spending more for the equipment to grow them means the difference between making it or not.
There is little argument that China hasn’t “cheated” in trade. Secretary of Commerce Wilbur Ross stated that “…every war ends in negotiations.” If the US and China wage a war over these tariffs, it is in the interest of both sides to ultimately negotiate new deals that ends the pain.
In the meantime though, Republicans look at a two-fold problem. First, they are ideologically at odds with their own President, but recognize that the President’s base supports his plan. Second, it’s hard to campaign on the value of the “tax cut” when the money gained will quickly be eaten by higher costs of living.
And for Democrats: criticize Trump everywhere you want, but keep quiet on tariffs. The base that Trump is trying to reach was once your voters, a key to getting them back is the belief that the “rust belt” industries will return. That takes quite a bit of cynicism though, because the idea that steel will roll out of Youngstown and tires out of Akron again remains unlikely.
Hillary Clinton, whatever you think of her, had the courage to go to West Virginia and talk about the end of coal mining. It didn’t do her any good politically, but it was real.
