Donald Trump's Zero Sum Trade Policy Affronts Classical Liberalism

If judicial nominations are the best reasons to support Donald Trump, one of the best reasons to oppose him is his trade policy. In a speech this week he made clear that he will block the Transpacific Partnership, unravel NAFTA, and try to raise tariffs generally, which he implied were a good substitute for other kinds of taxes. He would be the President most opposed to foreign trade at least since President Hoover signed the disastrous Smoot-Hawley Tariff Act.

There is a reason that freer trade has always been at the heart of the classical liberal vision—from the Manchester School in the nineteenth century to Reagan’s America.  It is not only that trade creates wealth through exchange. It is that trade is part of the engine that sustains civilization through human cooperation when we get rid of mind forged manacles, like mercantilism and distaste for foreigners. It is the enlargement of the sphere of cooperation domestically and globally that offers a long-run boost to security as well as prosperity.

Beyond the details of his policies, Trump’s position on trade shows him the opposite of a classical liberal—someone who thinks that political and economic life is zero-sum where the point of  a nation is win over other nations and the point of an individual is to win over others.  That is the recipe for endless political conflict and division—a medieval Game of Thrones played out in the twenty-first century.

I will not belabor the obvious point that trade is wealth creating. The Library of Economics and Liberty makes that point more eloquently than I can. Here is a bit:

Americans should appreciate the benefits of free trade more than most people, for we inhabit the greatest free-trade zone in the world. Michigan manufactures cars; New York provides banking; Texas pumps oil and gas. The fifty states trade freely with one another, and that helps them all enjoy great prosperity. Indeed, one reason why the United States did so much better economically than Europe for more than two centuries is that America had free movement of goods and services while the European countries “protected” themselves from their neighbors. To appreciate the magnitudes involved, try to imagine how much your personal standard of living would suffer if you were not allowed to buy any goods or services that originated outside your home state.

I would add only that another economic advantage of trade is that it expands the size of the market. And that enlargement provides greater incentives for innovation and the possibility of innovation is the greatest boon to the less well off. As I have noted before, innovations more rapidly go down the income scale than ever before.

To be sure, some people lose jobs because of trade, but many people gain jobs as well. And many people also lose jobs because of domestic competition in markets and all of the creative destruction of innovation. Yet we encourage domestic competition and innovation. More targeted policies to address these more general dislocations include better education and worker retraining. They can help not only with those displaced by trade but those displaced by technological change.

The geopolitical and cultural arguments for trade are as powerful as the economic ones. Trade is a force for knitting nations together. That is why the TPP can help free nations stand up to China just as GATT helped us wage the Cold War against the Soviet bloc. One geopolitical consideration should be of particular interest to Trump: by making other nations more prosperous we reduce pressures for immigration to the United States less likely.