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By Phil Levy

“[President Trump] hasn’t changed the Republican Party. We’re still a party of free trade.” —Senate Finance Committee Chairman Chuck Grassley (R-IA), 5/16/19

What does it mean to be the party of free trade?

It surely cannot mean opposing all trade barriers and backing all liberalization initiatives. In 1930, Herbert Hoover signed the Smoot- Hawley Tariff. In the 1950s, Senator Robert Taft helped block the creation of an International Trade Organization. In the 1970s, Richard Nixon imposed an import surcharge. And in the early 2000s, George W. Bush blocked steel trade with a safeguard.

Yet, at least since Ronald Reagan, the Republican Party has been philosophically inspired by free trade. President Reagan, in a 1988 Thanksgiving address, decried protectionism and said, “One of the key factors behind our nation’s great prosperity is the open trade policy that allows the American people to freely exchange goods and services with free people around the world.” Both Presidents Bush continued the embrace of free trade as an ideal, even as they oversaw policy exceptions.

One reason for this embrace was the intimate connection between free trade and three other pillars of a conservative approach: a market orientation, a commitment to limited government, and a belief in responsible internationalism. One need not argue the theoretical nature of such a linkage; one need only look at the experience of the Trump administration for a vivid empirical demonstration of how the policies interact.

In its pursuit of protection for the steel sector, as but one prominent example, the Trump administration invoked Section 232 of the Trade Expansion Act of 1962, which allows a president to block imports if he deems it necessary for national security. This immediately and inescapably put the Trump administration in the position of picking winners and losers in the U.S. economy. There are many more American workers in steel-using businesses than in steel-producing businesses, but the policy favored the latter over the former. Then, given the onerous nature of the policy, a system of product exclusions was set up, which required the Department of Commerce to begin judging, on a company-by-company basis, whether their requests to be spared taxes on their imports were legitimate. Further, when the steel program and other protectionist policies drew retaliation from foreign trading partners against U.S. farmers, the Trump administration responded with $12 billion of subsidies—and has announced plans for more. The protectionist approach expanded the role of the government in the economy and moved away from principles of limited, predictable governance.

The international effects have been no less severe. To rationalize the imposition of steel protection, the Trump administration had to declare publicly that numerous NATO and other defense treaty partners (e.g., Japan and Korea) posed a national security threat to the United States. Both this claim and the adversarial approach inherent in blocking a partner’s exports have significantly strained relations with key allies, have undercut the idea of the United States as a responsible leader, and have thus diminished American standing in the world.

The point is that the free trade ideal was tightly linked to core tenets of a conservative approach. From 1981 through 2016, although the pursuit of free trade was more pragmatic than pure, with multiple exceptions, there was a strong sense that the exceptions needed to be justified. They were, in fact, exceptional. And they stood out against a backdrop of major initiatives to liberalize trade and bolster the institutions of an open trading regime. These initiatives ranged from the Uruguay Round of trade talks launched under President Reagan and pursued under President George H. W. Bush, to a long string of bilateral or plurilateral free trade agreements and bilateral investment treaties, to the Doha Round of global talks launched under President George W. Bush.

This Republican commitment persisted even when the party did not hold the White House. The critical 2015 House vote to grant President Barack Obama “Trade Promotion Authority” passed with 191 Republican votes and 28 Democratic votes. Republican congressional leaders knew the vote was important because it was a prerequisite for concluding the Trans-Pacific Partnership (TPP), an agreement that was critical for establishing U.S. leadership in the Asia-Pacific, as well as on trade more generally.

President Donald Trump has introduced a sharp departure from the party’s support for free trade. His first notable act on trade was to withdraw the United States from the TPP, thereby relieving China from pressure to reform and excluding the United States from the benefits of the deal. He regularly glorifies tariffs and attacks the institutions and agreements that have supported the global open trading system. While President Trump will occasionally suggest that he is pushing for a freer, fairer trading order, the agreements he has pursued have generally sought to restrict trade. From new quotas on Korean steel exports (KORUS), to tighter rules of origin for auto trade with the United States-Mexico-Canada Agreement (USMCA, which includes minimum wage requirements!), to a new mandate to negotiate limits on auto trade with Europe and Japan, there has not been a more protectionist president in the modern era.

The question, then, is whether President Trump’s staunch opposition to free trade defines the current stance of the Republican Party. There are at least three reasons to think that it does.

First, under current law, a president has tremendous latitude to adopt protectionist policies. Although Congress has authority over international trade under the U.S. Constitution, it has effectively delegated a great deal of protectionist power. There is an important asymmetry in this delegation. Since at least the 1930s, there was a presumption that a president would be substantially more inclined toward free trade than the Congress. Thus, Congress over the years has retained substantial hurdles against trade-liberalizing agreements (e.g., the requirements of Trade Promotion Authority) while allowing presidents enormous discretion for imposing trade barriers, particularly if a president is willing to declare an emergency or invoke national security. Thus, the branch of the Republican Party that is currently setting trade policy is the protectionist White House. Second, even if those policy moves are tempered by discreet warnings or public importunings from other parts of the Republican Party, the net result is still aggressively protectionist. It is this net result that will necessarily shape public perceptions of the Republican Party both at home and abroad.

Finally, the idea of a free trade branch of the Republican Party battling a protectionist branch is largely hypothetical. In practice, the strongest resistance that President Trump has faced on tariffs from fellow Republicans has generally consisted of public statements of discomfort. That falls far short of what a concerted Republican opposition movement would look like.¹

The effective abandonment of its free trade credentials sets the Republican Party on a perilous path. Perhaps as a reflection of the philosophical inconsistencies described above, the Trump administration has failed to describe an alternative vision to replace the goal of free trade. Sometimes, administration officials will argue that free trade is still the goal and that the protection simply serves as leverage to push other countries toward that goal. Other times, the president will exalt in the protection itself, reveling in tariff revenue and the benefits for protected industries.

Either excuse leads to trouble. The problem with protection as a negotiating tactic is that the administration has not been very successful in striking agreements. The two noteworthy agreements it has struck to date were with South Korea and then with our partners in the North American Free Trade Agreement. Neither resulted in much liberalization and each increased protection in some sectors. Though the Trump administration did ultimately agree to lift its steel and aluminum protection in North America in light of the completed USMCA, the experience called into question the leverage approach. Why was it necessary to inflict the pain of protection when Canada and Mexico were willing to negotiate anyway and the results were so meager?

This approach can also strain the patience of farmers and businesses when the promised results never come. This effect has been most evident in the tariffs against China under Section 301. The Trump administration had been suggesting since the summer of 2018 that the pain suffered by U.S. sectors would be a short-lived sacrifice. This led to a negative reaction by both sufferers and financial markets when, in the spring and summer of 2019, it became clear that this conflict was only going to escalate. Although there can be substantial enthusiasm as forces march off to battle with promises of quick victory, support can dissipate when losses mount and there is no useful resolution in sight.¹ 

To the extent that President Trump’s protectionism is based on the anticipated benefits of blocking trade, experience is likely to shine an unforgiving light on the policy. As but one recent example, recent studies have found that the steel and aluminum tariffs cost Americans $900,000 per job saved or created, while washing machine tariffs cost $815,000 per job. It is also likely that the costs will mount over time; companies that maintained U.S. production under the belief that the tariffs would be short-lived could move elsewhere as the protection endures. Perhaps as a result of these rising costs, opinion surveys are finding mounting public support for trade.

“The effective abandonment of its free trade credentials sets the Republican Party on a perilous path.”

Though President Trump will ultimately leave office—no later than 2025—and even though some prominent Democrats have been supportive of his approach, it is the Republican Party that will be tarred by the policy failure and the sacrifice of key principles.

So what can Republicans do to reclaim the mantle of the party of free trade? Any effective approach will require public confrontation with President Trump. At one point, there was a theory espoused by some party leaders that the best tactic would be to pursue quiet discussions with the president behind the scenes. These leaders hoped to persuade the president to eschew a protectionist path while they avoided any sort of public dispute. That effort clearly failed.

Congress has ample powers at its disposal. There is the constitutional power to regulate trade, the power of the purse to direct executive branch actions, the leverage that comes through confirmation hearings in the Senate, and the ability to conduct oversight hearings and publicly question policy. Once again, we come to a linkage between the push for free trade and long-standing Republican principles—in this case, the idea that there should be limits to the power of the Executive Branch.

This alternative path, of course, has its own perils. It would require open disagreement with the leader of the party. To bring voters along, it would require open discourse about the importance of trade and the damage that trade barriers can do. But in this moment, more so than at any in recent memory, being the party of free trade requires actively fighting for free trade in both word and deed.

If they choose to avoid such confrontation with their own president, Republicans can still call themselves the party of free trade. But no one will believe them.

¹There are some notable exceptions. Senator Pat Toomey (R-PA) and Representative Mike Gallagher (R-WI) each sponsored and pushed legislation that would have restricted a president’s ability to abuse national security claims for protectionist ends. Despite bipartisan sponsorship, the bills have not advanced in either chamber.
"The Future of Conservative Internationalism," which is a collection of essays from the Reagan Institute Strategy Group, convened in Beaver Creek, Colorado, in July 2019.