Who Are the Real Trade ‘Fundamentalists’?
A new band of conservatives has joined progressives’ longstanding drive to save Americans from the scourge of libertarian economics, and one of their primary targets is … U.S. trade policy?
Apparently so, according to the head of the newly formed American Compass, Oren Cass. He tells the Washington Post that “an actual conservative economics would be much more skeptical of free trade than is libertarian economics,” which he and his colleagues elsewhere have blamed for decades of U.S. trade policy and its alleged destruction of the American manufacturing workforce. Leaving aside the laughable assertion that Republican policy is rife with Hayekian fundamentalism, there are two fatal flaws to Cass’s argument: First, contrary to conventional wisdom, the United States is hardly a Ricardian bastion of free trade. Second, to the extent modern American trade policy has reduced import restrictions, this reflects not blind devotion to markets or economic theory but instead core foreign policy concerns, blatant mercantilism, and, a widespread acceptance that, while trade liberalization certainly wasn’t costless, the alternative was far worse. These facts reveal that the new “pragmatists” in Washington, whose default position is trade skepticism and protectionism, are the real ideologues.
Since the 2016 elections, a common refrain from the right is that the rise of American populism was a response to runaway globalization and its deleterious impact on America’s working class. It’s true that U.S. tariff rates have (until recently!) declined consistently since World War II, and the United States has entered into several “free trade” agreements since the 1990s. But as I explained in 2016, these rudimentary proxies for trade liberalization belie the fact that, over the same period, the United States has continued to use tariffs and quotas to protect politically powerful sectors and has become a world leader in the use of non-tariff barriers to achieve similar ends.
The laundry list of such methods includes anti-dumping and anti-subsidy duties, intellectual property-based import bans, “Buy American” and other domestic procurement restrictions, export subsidies, technical regulations and licensing laws, shipping restrictions (the Jones Act), investment restrictions, and export licensing systems. Far from removing these restrictions, moreover, Congress has in many cases—and certainly on trade remedies—moved to make them even more restrictive (and beneficial for the domestic industry that lobbied for them), while the executive branch has vigorously defended such measures at the WTO and in FTA negotiations.