I hope you all had a wonderful Independence Day weekend, full of grilling and exploding stuff. I surely did. Anyway, right before the break, I participated in an event on whether and to what extent the United States would continue implementing economic nationalism and isolationism for the next few years. Spoiler: We all agreed that it would, given the current view among the leadership of both major political parties that a rejection of past trade liberalization was necessary for both political and economic reasons. (Hey, don’t shoot the messenger.)
On the economic point in particular, the conventional wisdom in Washington—and seemingly a rare area of bipartisan consensus—is that free trade, trade agreements, and globalization have been great for wealthier Americans and the nation overall, but a a raw deal for the American working class, and therefore a major contributor to economic inequality in the United States. And so to reverse these trends (or, at least, to look like we’re trying to reverse them), economic nationalism—tariffs, industrial policy, “Buy American” rules, and most definitely no new trade agreements—are on tap for the foreseeable future. As one recent book put it, Trade Wars Are Class Wars so that’s what we’re getting.
Free traders often counter this particular claim by noting* that, while foreign competition undoubtedly disrupts certain lower-income American workers (particularly in less-skilled manufacturing industries like textiles), these same individuals also disproportionately benefit from lower prices for basic necessities. Thus, the D.C. trade debate often devolves into a typical (and admittedly boring) “jobs versus consumables” choice, with advocates for each side predictably sticking to their preferred positions.