- Current political and economic issues succinctly explained.
There are now 23 Democratic presidential candidates vying to succeed U.S. President Donald Trump. But all of them are tongue-tied on one of the biggest foreign-policy issues of our generation: Trump’s escalating trade wars, which are starting to resemble the disastrous beggar-thy-neighbor policies of the 1930s. Democrats have been so suspicious of trade agreements for many decades, and so tempted by the siren of protectionism, that they now find themselves speechless as Trump continues on a ruinous path.
If Democrats cannot find their voice on this issue, they will not only forsake a major pocketbook issue that could work to their advantage in the campaign. They will also send a message to the world that Trump’s trade policies—which have alienated Washington’s closest allies and are fueling a growing confrontation with China—have broad support in the United States. This despite the three-quarters of Americans, the highest number ever recorded, who believe that trade is an opportunity to boost U.S. growth, not a threat to the economy.
Having closely watched the Democrats twist and turn over trade since the beginning of President Bill Clinton’s administration in 1993, I would offer the following three recommendations to help the candidates find a voice on the issue.
First, Democrats should stop being ambivalent about trade itself. Trade is good, period. Trade has built U.S. alliances, lifted people out of poverty around the world, created huge new markets for U.S. products, encouraged the world’s most innovative companies, and driven down the costs of food, clothing, electronics, and many of the other necessities and pleasures of life.
What Democrats oppose, and should oppose, is Republican trade policies that have too often empowered large corporations while negatively impacting many American workers. And the trade policies of the United States for the past 30 years have largely been Republican trade policies.
Some might object, arguing that Clinton supported NAFTA and passed it through Congress (though with modest amendments to strengthen labor and environmental protections). President Barack Obama concluded the Trans-Pacific Partnership (TPP) with Japan and 10 other Pacific Rim nations, the deal that Trump tore up on one of his first days in office.
Both objections are true, but it is also true that both negotiations were launched by Republican presidents and inherited by Democrats. Walking away in the middle would have been a slap in the face to close allies, something that U.S. presidents historically were loath to do.
The elements of those deals that congressional Democrats found most objectionable—empowering corporations to sue governments, weak labor and environmental enforcement, sweetheart patent protection for the drug companies—were Republican priorities.
And it was Republicans who fought to slash funds for helping and retraining workers who lost jobs to cheaper imports. Democratic presidents reluctantly accepted those Republican priorities because it was the only way to get the Republican votes they needed in Congress for the deals to pass.
For Democrats, the choice for decades has been a Republican trade policy or no trade policy. A truly Democratic trade agenda would have produced deals quite different from NAFTA or the TPP.
Second, Democrats must stop letting Trump dominate the discussion on tariffs. Tariffs are import taxes. Call them taxes. And point out that tariffs are the most regressive taxes imaginable, raising prices for all Americans on essential household items. Ordinary Americans are the ones getting hurt. They are seeing prices soar for cars and washing machines and furniture, and they are about to see the same for clothing and shoes and cell phones if the Trump administration imposes the next round of taxes on imports of Chinese consumer goods.
Farmers, who are facing their worst year in decades as prices fall for soybeans, wheat, fruits, and other products targeted by Chinese and European tariff retaliation, have also been hit hard. Small manufacturers who rely on Chinese-made parts are watching their profits shrink or disappear. The agreement belatedly reached on May 17 with Mexico and Canada to lift tariffs on steel and aluminum imports was a much-needed reprieve, but it will be dwarfed by the next round of U.S.-China escalation.
Large corporations such as Caterpillar and Monsanto are not happy with the president over tariffs either. But they aren’t nearly as exposed. That’s because the Republican-led Congress handed big companies a huge tax cut in 2017, which so far has more than offset the added costs they face from the tariffs. Caterpillar does nearly 60 percent of its business outside the United States and has a global chain of suppliers, factories, and customers.
While the tariffs are certainly not welcome, such a large global company has enormous flexibility to shift sourcing and production to different countries to avoid tariffs and hold down costs. Small U.S. manufacturers or American family farmers do not have the same choice. Democrats should be their champions.
Third, Democrats must start talking clearly and honestly about China. China is a big problem, and Trump is making it a bigger problem. Both parties got China wrong. There was bipartisan faith in the 1990s and 2000s that China’s economic reforms would lead to political reforms, hopes that have proved to be naive. There is now a clearer-eyed consensus that China’s trade practices—including technology theft and industrial subsidies—are damaging to the United States and to all other market-driven economies.
But Trump’s approach to China is wrongheaded. The United States won the Cold War with Russia not through unilateral bluster and economic sanctions but through patiently building alliances, championing the construction of global institutions like the World Trade Organization, and nurturing U.S. economic strength. Trump is instead punishing those same allies; the latest threat is to slap tariffs on European and Japanese car imports unless they agree to cut exports to the United States.
Trump’s tariffs are also forcing a bilateral U.S.-China showdown that is damaging both economies—and may well escalate into further confrontation—instead of applying the consistent and steady pressure that is needed. This would mean a patient campaign using WTO rules to constrain China, working closely with allies to tackle Chinese subsidies and cybertheft (instead of hitting them with tariffs), and using targeted trade sanctions as needed instead of massive new taxes that hurt all Americans.
A successful trade policy also requires addressing the real and mounting challenges at home. Where is the Republican strategy for educating and retraining America’s workforce for an economy in which technology will be more disruptive than trade? Where is the investment in infrastructure? Where is the support for research and development to strengthen U.S. innovation? Where is the immigration policy that attracts and retains the best and brightest instead of driving them away? Competitive success against China primarily requires building and nurturing U.S. economic strengths rather than using economic sanctions in an effort to cut China down to size.
Embracing a positive and forward-looking trade agenda would be a far better approach for Democrats than holding candidates to some litmus test on the deals of the past like NAFTA or the TPP. Trump’s policies have made those old debates irrelevant. Americans deserve, and the world needs to know, whether the Democrats are just Trump Lite when it comes to trade, or if they can embrace a new and forward-looking vision that embraces trade as part of a strategy to build a more inclusive prosperity.