Trump’s trade war is as American as apple pie
The combination of nostalgia, economic populism and anti-China nationalism is irresistible
I suspect Donald Trump’s threat to slap tariffs on steel and aluminium imports might not happen. This is about leverage. He wants to frighten his global competitors into rewriting the free trade deals that have sucked US jobs overseas. He also wants to put China back in its box. As trade policy goes, this is bold strategic thinking. It’s also a rare example of a politician keeping his word.When Trump came out for protecting industry in his election campaign, Republican critics called him a heretic. Not true. Until the thirties, the Republicans, who were once strong in the industrial North East and Midwest, backed protectionism. Conservatives swallowed free trade at the outbreak of the Cold War because it helped to build up overseas allies against the Soviet Union (all the while that the US also bankrolled their defence), and the necessity of this game plan was clear up until the fall of the Berlin Wall. But after 1989, even though it no longer served any strategic interest, Republicans and Democrats continued to support policies that helped US companies shift jobs overseas. Large parts of Middle America were devastated.
The big winner was China. Some 2.7 million US jobs migrated there from 2001-2011, of which 2.1 million were in manufacturing. Globalisation of this scale and speed undermines Western security by empowering its non-democratic competitors. It’s true that America’s allies complain that they will be hurt by tariff walls even more than China but, as the conservative journalist Daniel McCarthy has written, it’s perverse that they should insist the US bleed itself dry to keep them happy, while their common enemy actually grows richer and more capable of harm. American trade policy is sticking to a Cold War-era logic, except that in this version of the conflict, the bad guys are winning.The economists who criticise Trump for ignorance on trade make some good points. If he did impose steel tariffs, he’d drive up the cost of manufacturing at home and hurt consumers. But the free traders display their own naïveté when writing about Beijing. The world is not, as too many suppose, driven by dispassionate market forces that seek to make everyone richer and freer. China is run by a communist party that uses capitalism to advance nationalist goals — and its trade policies, far from being utopian, include cheating and dumping. Why shouldn’t the US fight back?
The answer of course is that unilateral action leads to chaos. If America is to come first, the rest of us must come second, including Britain. Trump recently tried to put an eye-watering 292% tariff on a Canadian aeroplane maker, threatening jobs at its plant in Northern Ireland. Happily, the courts threw his suit out. Trump’s economics are essentially Darwinian, and if we are to live in a jungle, the lions will eat the zebras, and Britain isn’t even a zebra. It’s a wee rabbit.That said, it’s not exactly his job to care about the rest of the world. He was elected to represent the people of New Hampshire, not Guangdong province. Why do I mention New Hampshire? Because it’s the state that lost the largest percentage of its manufacturing jobs to China, and it happens also to be the first-in-the-nation presidential primary. That’s why every four years, like clockwork, presidential candidates canvas its towns promising to protect local jobs. Obama did it. The Clintons did it. And when they got into office, they all forgot and backed free trade instead. This is partly for reasons of economic rationalism, for sure, but also because across the world, the Left is trying to hold together an impossible coalition. It wants to be the party of the industrial working-class, but also the virtuous immigrant and the tech-savvy consumer. Trade is a compelling example of where its economic and cultural interests collide.Trump won in part by exploiting that contradiction, by promising to rebuild the country’s industrial class at the expense of the hippie environmentalist or the Mexican immigrant. That’s his path to re-election, too. There might not be that many steel jobs left in the US, but the metal industry is concentrated in those very rust belt states that swung dramatically from Obama to Trump in 2016. Trade is the essential issue to Trumpism: it combines nostalgia, economic populism and anti-China nationalism. The last part is critical. To those who ask why Trump isn’t content to let his low tax policies tempt employers back to the US without threatening tariffs, when the evidence suggests this is already happening, the answer is that they don’t include the satisfying option of shooting the Chinese dragon.
That said, prepare for a climbdown if the world blinks and offers the US concessions on trade. So long as the jobs do return, Trump’s people will be happy. For nothing matches the dignity of skilled labour, of looking at an aeroplane or a cargo ship and knowing you built it. Industry turns regular folk into giants. That’s the American dream.
© The Daily Telegraph