The Conservative Case & The Progressive Case for Globalization



Jeb Hensarling | Inu Manak & Helena Kopans‐​Johnson | Cato Institute

As part of the Cato Institute’s 5-part series, Defending Globalization: Law and Politics, the following two essays were published on May 30th, 2024. “The Conservative Case for Globalization,” authored by Jeb Hensarling, can be found below. Following it is “The Progressive Case for Globalization” by Inu Manak and Helena Kopans-Johnson.


The Conservative Case for Globalization

Many self‐​styled conservative talking heads and members of Congress are calling for industrial policy, forms of wage and price controls, and new federal agencies to police free speech. Such positions have historically been anathema to the conservative movement and should remain so. Along with these issues, there is likely no other issue more timely or relevant to the question of just who is—and what is—a conservative than the issue of globalized free trade.


To settle the question of who may legitimately claim the title of “conservative” today, a quick reminder of the movement’s origins and evolution and their relation to trade is helpful. Although admittedly there is no universally held definition of conservatism, there have been broadly recognized and accepted core principles, as well a proud historical lineage. The English parliamentarian and philosopher Edmund Burke is generally recognized as the father of conservatism. Burke, throughout his career, advocated for freer trade. He understood that trade is not a zero‐​sum game between countries. In supporting reduced trade barriers between Britain and Ireland, Burke argued, “The prosperity which arises from an enlarged and liberal system improves all of its objects; and the participation of trade with flourishing Countries is much better than a monopoly of want and penury.”

His arguments included those based on economic utilitarian grounds. For example, he argued in Parliament that a free market without government interference is the best method to help the poor. As conservatives today continue to fight the rise of the social welfare state, they have historically recognized, as did Burke, that cost‐​increasing protectionism simply creates greater welfare dependency, not less.

Burke’s more impassioned and important argument, however, rested upon a recognition and reliance upon natural rights (conservatives should think, “We hold these truths to be self‐​evident …”). Burke believed that these rights clearly entitled and protected an individual’s right to both own property and to trade it freely.

For decades, most conservatives have proudly viewed themselves as free‐​market conservatives, a moniker whose principled intellectual foundation rests upon Adam Smith’s classic work An Inquiry into the Nature and Causes of the Wealth of Nations. Noteworthy, Smith was a friend and contemporary of Burke. Smith skewered the prevailing mercantilist and protectionist policies of the day and argued on utilitarian grounds that freedom of trade across international borders benefited the masses. He wrote, “Trade which, without force or constraint, is naturally and regularly carried on between any two places is always advantageous.” Some modern‐​day conservatives have now begun relying on the limited exceptions to the free trade rule (e.g., national defense) that Smith enumerated in his work to justify their protectionism. But any plausible reading of Smith indicates that these exceptions are just that—exceptions—which he further explained were rarely justified and often subject to abuse.

Today one of the greatest accolades within the conservative movement is that of “constitutional conservative,” a term meant to convey fealty to the Founding principles contained within the Declaration of Independence and US Constitution. Any conservative would be well advised to carefully reread the Declaration’s list of the repeated “injuries and usurpations” of the Crown, which evidenced its tyranny and justified American independence. The list includes “cutting off our Trade with all parts of the World.” Thomas Paine, author of Common Sense, the most influential pamphlet of the Revolutionary Era, wrote that to a trading country, freedom of trade was “of such importance, that the principal source of wealth depends on it; and it is impossible that any country can flourish … whose commerce is … fettered by laws of another.… A freedom from the restraints of the Acts of Navigation I foresee will produce … immense additions to the wealth of this country.”

In addition to Paine, most Founders believed in the goal of free trade and viewed it as necessary for the prosperity of the republic. They believed the principal and proper use of tariffs should be limited to revenue raising, not protecting domestic industries. In fact, at the dawn of our republic and for more than a century thereafter, the bulk of tax revenues were derived from import duties, given their relative ease of collection, as Phil Magness lays out in his Cato Institute essay on the history of tariffs in the United States between 1787 and 1934. The other recognized legitimate use of tariffs was to incentivize other nations to open their borders to our trade. These purposes are in distinct contrast to the purposes proposed by many today who seek to engage in industrial policy that benefits discreet economic sectors or industries or that promotes economic nationalism designed to severely limit or close off our international trade.

Article l, Section 8 of the Constitution unequivocally gives Congress the power to both “regulate Commerce with foreign Nations” and to “lay and collect Taxes, Duties.” Because of this section, some argue that conservatives stand on firm constitutional ground in favoring the imposition of tariffs. It should be noted that Section 8 also empowers Congress to borrow money. Given the magnitude and dangerous trajectory of the national debt, few conservatives believe the exercise of such power a wise one. The same is true for the imposition of tariffs.

Finally, the most conservative leader of the 20th century, President Ronald Reagan, confidently proclaimed that in America, “Our trade policy rests firmly on the foundation of free and open markets.” Although Reagan did implement some protectionist measures, they were part of his broader efforts to stave off even worse protectionism from Congress and to push for broader liberalization through the US‐​Canada Free Trade Agreement (the North American Free Trade Agreement’s [NAFTA’s] predecessor) and the US‐​Israel Free Trade Agreement, as well as launching negotiations that led to the creation of the World Trade Organization (WTO), the successor to the General Agreement on Tariffs and Trade (GATT). Trade doubled on his watch.

There has been debate over the use of tariffs ever since America became a constitutional republic. There have been times in our history when, regrettably, tariffs carried the day. And certainly, there have been tariffs enacted that have arguably fallen into Smith’s enumerated and limited exceptions. What isn’t debatable is that the conservative movement has always rested on a firm foundation of personal freedom, including economic freedom, based on natural rights, and at least in the post–World War II era, this has always included the freedom to trade.

Thirty‐​five years after Reagan, President Donald Trump tweeted, “The word TARIFF is a beautiful word indeed,” as he proceeded to impose 10–50 percent tariffs on steel and aluminum and a wide array of Chinese goods. He has now doubled down and called for a universal 10 percent tariff on all foreign‐​produced goods. Although conservatism has been the political movement supporting free trade for decades, a number of self‐​styled conservatives are now abandoning this long‐​held conservative principle and are finding common cause with both Trump and the majority of protectionist Democrats on the issue. They shouldn’t, and their arguments in doing so are unpersuasive.

National Security and Protectionism

The number‐​one argument proffered to support protectionism is one based on national defense. After all, even Adam Smith admitted that national defense considerations were, of necessity, one of the exceptions to the free trade rule. However, from my personal experience of serving 16 years in Congress, I know firsthand how often bad policy is wrapped in the cloak of national defense.

When Trump unilaterally imposed his steel and aluminum tariffs in 2018, he did so under the authority of Section 232 of the misnamed Trade Expansion Act of 1962. To exercise that authority requires a finding that the imports in question threaten to impair national security. However, in the same year that the tariffs were imposed, James Mattis, then secretary of defense, noted that only 3 percent of US production of steel and aluminum were actually needed for our armed forces. That begged the question of how, then, steel and aluminum tariffs were justified for everything from automobiles to beverage cans. Do some truly believe that a Toyota 4Runner or a can of Heineken beer threaten our national security?

Another example of the argument occurred during debate of the annual National Defense Authorization Act (NDAA). An amendment was offered to effectively force the military to buy only US‐​made running shoes for new recruits. Are running shoes critical to our national defense? Incidentally, the amendment would have had the effect of benefiting only one company: New Balance. It was argued that many running shoes sold in America are manufactured in China. True, but they also continue to be manufactured in Taiwan, Indonesia, Finland, Italy, and Thailand as well. Should running shoes truly become critical to the defense of our nation? Could we not stockpile them when global prices are cheap? In a time of war, would we be unable to ramp up our own production of running shoes? After all, during World War II we showed that we could ramp up domestic production of aircraft from just over 2,000 in 1939 to 300,000 by 1945. Hard to believe we’re incapable of doing the same for running shoes or an array of other goods in the 21st century.

During debate on another NDAA bill, an amendment was offered to force the military to only buy stainless steel flatware from domestic sources. In opposing the amendment during debate, House Armed Services Chairman Mac Thornberry (R‑TX) remarked, “I just don’t think that the knives and forks we use qualify as vital national security.” What does negatively impact national security, though, is the needless depletion of national wealth that occurs every time the government fails to buy the best product at the most economical price.

Washington undoubtedly has legitimate concerns over supply chain reliance on China for products with a clear national security nexus. But many companies are already in the process, or have completed, a reengineering or relocation of their supply chains, and with additional conservative tax and regulatory policies, even more would do so. Importantly, there remains a whole host of export controls, foreign direct investment approvals, and defense procurement requirements to help meet the threat that China poses. When it comes to our national defense, clearly the Trump administration’s tariffs didn’t mute China’s saber rattling, its defense buildup, or its incursions into the South China Sea to threaten Taiwan.

As an aside, it needs to be noted that, in almost all respects, the tariffs imposed on Chinese goods by the Trump administration failed. The trade deficit, which remains a most misleading statistic but one favored by the former president, actually worsened during the Trump administration. Furthermore, tariffs proved to be a two‐​way street—as they usually do. Just ask the Midwest farmers who suffered massive losses from retaliatory tariffs from China and had to be bailed out with $28 billion of subsidies from the US taxpayer. Finally, it could not be clearer that the tariffs not only had no impact on weakening China’s military, but they also clearly had no impact on China’s human rights abuses or its carbon footprint.

More often than not, the national defense argument for protectionism is unjustified and should never become a pretext for the abandonment of free trade in favor of industrial policy, corporate welfare, and protectionism. These all harm economic growth and innovation and consequently harm our national defense.

Additionally, although trade does not guarantee peace—Russia’s gruesome invasion of Ukraine even though the two nations have a fair amount of two‐​way trade, for example—there is clear evidence that trade ties tend to reduce armed conflict between countries. This is consistent with what pro‐​market Enlightenment philosophers argued. Beginning in the aftermath of World War II, the United States used trade as a tool to enhance national security. It has been nearly 80 years since major world powers engaged in a major war—a period of relative peace that has coincided with the establishment of the US‐​led global trading system.

Likewise, trade can be an immense tool for American soft power. It helps spread American values and it enriches allies. In the early 1990s, Mexico was facing a policy choice: it could either continue down the path of protectionism and heavy government intervention, or it could move “toward decentralized, democratic capitalism.” The George H. W. Bush and Bill Clinton administrations understood that by better integrating the Mexican economy into the United States’ economy, NAFTA could nudge Mexico away from the false allure of socialism. On top of the economic benefits of NAFTA, the agreement was a foreign policy success. Although certainly not perfect, and despite some recent backsliding, Mexico today is more committed to binding and predictable international trade and investment rules than it was in the 1980s and early 1990s.

Too often trade is viewed as weakening America’s national security when in fact it’s usually the opposite.

Trade, the Working Class, and Domestic Manufacturing

Another prominent argument offered by self‐​styled conservatives is that free trade somehow hurts the working class. Conservatives undoubtedly consider the Tax Cuts and Jobs Act of 2017 (TCJA) to be the crowning achievement from when Republicans last governed. Yet many who heralded its pro‐​growth tax relief for working families turned around and supported tax increases on these very same families in the form of tariffs.

Countless studies have shown that almost all the costs of the tariffs initiated under the Trump administration were borne by consumers and businesses. At worst, these costs may have offset most of American households’ average savings from the TCJA. For example, the cost of a washing machine increased an average of $86 just months after tariffs were imposed on them. According to the American Action Forum, all those tariffs combined have now increased consumer costs approximately $51 billion a year. Some tax cut. To make matters worse, the Tax Foundation calculates, based on current levels of imports, that Trump’s universal 10 percent tariff proposal represents a whopping $300 billion tax increase. Just when did tax increases become popular among conservatives?

Today, most blue‐​collar workers work in services, not manufacturing, and their greatest concern is not the loss of their job due to foreign competition, it is the loss of buying power from a paycheck that has shrunk in the face of historic inflation. I doubt many so‐​called elites shop at Walmart, but many working people certainly do. If a customer buys a Zebco fishing rod there it has been produced in China, and if they pick up a pair of Cowboy Cut Wrangler jeans, they’ll likely have come from Bangladesh. Although Walmart doesn’t like to advertise the fact, it remains the nation’s largest importer, with its shelves stocked with tons of foreign‐​produced goods that help working families make ends meet. Tariffs wouldn’t bring back manufacturing jobs that produce fishing rods or blue jeans; they’d only make those products more expensive.

Closely related to the working‐​class harm argument is the loss of manufacturing jobs argument that others refer to as a “hollowing out” of the industrial heartland. Indeed, manufacturing employment as a percentage of the workforce has decreased dramatically over the past several decades. But contrary to popular belief, those jobs have not been lost to hamburger‐​flipping jobs but instead to transportation, warehousing, construction, health care, tech, communications, finance, and other service‐​oriented parts of our economy—industries that benefit from open trade and whose jobs pay far more than those in low‐​skill manufacturing. America’s comparative advantages in these industries is one of the reasons why we are the world’s number‐​one exporter of services and continuously run a services trade surplus.

The dominant factor in the loss of domestic manufacturing jobs is not foreign competition but instead productivity. For example, according to the American Iron and Steel Institute, it took 10.1 hours to produce a ton of steel in 1980; today it takes only 1.5 hours. There may be fewer manufacturing workers today, but because of productivity gains, they are better compensated. According to the Center for Strategic and International Studies, the median income of the remaining US blue‐​collar manufacturing jobs has increased 50 percent in real inflation‐​adjusted terms between 1960 and 2019.

The reality is that tariffs harm most manufacturing jobs. Relatively open trade is vital for manufacturing and our defense industrial base. As the Cato Institute’s Scott Lincicome and Alfredo Carrillo Obregon document, around half of all goods imported are in fact intermediate goods, raw materials, and capital equipment used for domestic manufacturing. For example, many pipeline manufacturing companies import specialty casing that is necessary for oil and gas pipelines. Taxing these imports hurts workers at these companies or, if the higher costs are passed on, their energy‐​producing customers. How ironic for any conservative to call for an “all of the above” energy policy (one that supports the development and deployment of every form of energy) yet support making hydrocarbons more difficult and expensive to produce.

We could strengthen domestic manufacturing, the defense industrial base, and our energy sector by unilaterally eliminating tariffs on intermediate inputs, raw materials, and capital equipment. Doing that would truly put America first.

Trade, Family, and Community

Trade makes the necessities of life cheaper and more abundant for families. Walking through a grocery store reveals that a lot of our everyday food items are imported from around the world. This raises real incomes for Americans by increasing their purchasing power. Indeed, according to recent research from the Peterson Institute for International Economics, reduced friction in international transactions since the end of World War II—from trade liberalization and improvements in transportation and technology—increased US gross domestic product by $2.6 trillion in 2022 dollars, or about $7,800 per person and $19,500 per household. A 2016 study from two economists estimates that trade particularly benefited low‐​income consumers, who spend more of their income on items that were traded, including manufactured goods and food.

Although the gains over the last 75 years have been significant, there is more work to be done. Consider a family outfitting their kids to go back to school in the fall. As Bryan Riley of the National Taxpayers Union recently noted, backpacks face a 17.6 percent tariff and rulers face a 13.6 percent tariff; meanwhile, blue jeans face an 8.4 percent tariff and shoes face an average tariff of 10.8 percent. Eliminating these tariffs on basic family necessities would raise real incomes of American families.

Likewise, trade benefits communities and civil society. Because of relatively open trade, we can consume more for less and, as a result, we can work fewer hours, which means that it frees up time to participate in activities that build community, whether it’s volunteering, going to church, or coaching tee‐​ball. (The bats and tees are probably imported too.)

Moreover, although the media focuses on midwestern cities that hurt by import competition, there are countless stories about cities and towns that were once hurt by imports but that now thrive, in large part because of international trade. Take the border areas in Texas. They once had large concentrations of low value‐​added manufacturing. But according to the Federal Reserve Bank of Dallas, “NAFTA, along with other market forces and technological change, created different jobs in Texas as low value‐​added manufacturing jobs were lost and as trade and investment increased. Border cities went on to gain far more employment than what they lost amid increased imports from Canada and Mexico and shifting production between the countries.” Indeed, economic integration has been enormously beneficial for Texas. The same Dallas Fed report notes, “A 10 percent increase in manufacturing on the Mexican side of the border increases employment 2.2 percent in Brownsville, 2.8 percent in El Paso, 4.6 percent in Laredo and 6.6 percent in McAllen.”

Conservatives have long argued that family and communities are the bedrocks of a free and prosperous society. Freer trade complements both. It’s surely not a cure‐​all for what ails our culture, but it helps. And the things that actually have hollowed out many American families and communities go way beyond economics. The underlying causes lie more in the realm of cultural changes and bad public policies, especially in the area of welfare. Tariffs can’t fix problems that trade didn’t cause.

Protectionism, Bureaucracy, and Rent Seeking

One of the great rallying cries of many conservatives remains “Drain the swamp!” But after the previous administration imposed its tariffs, it immediately empowered hundreds of Washington bureaucrats at the Department of Commerce and the Office of the US Trade Representative to grant individual waivers from these very same tariffs under what can at best be described as an opaque process with discretionary standards. As one company officer of a small pipeline manufacturer put it, “[Applying for a waiver] is a nightmare, like dealing with a lawyer and the IRS at the same time.” A schedule of tariffs doesn’t drain the swamp; it instead fills it with a cadre of well‐​connected lawyers, lobbyists, and special interests to work a system run by Washington bureaucrats.

It is difficult to comprehend how one can proudly wave the Gadsden flag, proclaiming “Don’t Tread on Me,” and then seemingly turn around and remark, “But go ahead ‘swamp,’ take away my freedom and choose for me which products I’m allowed to buy.”

Others charge that global trade is inherently antithetical to American interests. Notwithstanding being polysyllabic, “globalization” is now treated as a four‐​letter word. Although “globalization” is not clearly defined, the word conveys to many not just a loss of American jobs but a loss of American interests, prestige, identity, and perhaps most importantly, a loss of American sovereignty. Undoubtedly what comes out of the vast array of international organizations and forums in which the United States participates has helped fuel these fears. Even if it is not harmful, US membership in many of these may be of dubious value to some conservatives. As one former Congressman said in private conversation, “Why do we continue to pay the UN to insult us when they’d likely do it for free?” Conservatives legitimately question whether it is truly in America’s interest to participate in global conferences and organizations such as the United Nation’s Climate Change Conference, the Inter‐​American Development Bank, and the International Trade Union Confederation.

What can’t be questioned, though, is that Article I, Section 1 of the Constitution still reads, “All legislative Powers herein granted shall be vested in a Congress of the United States …” (emphasis added.) What can’t be questioned, though, is that Article II, Section 2 still reads in part, “[The President] shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur.” Whatever treaties we enter into, and whatever commitments we make to other countries or international organizations, are an exercise of US sovereignty, not the loss of such. And what we enter into, we can exit. The United States unilaterally terminated its first treaty in 1798 and has done so on many occasions since.

No nation‐​state or international body can compel us to do anything without our consent. Should we choose to walk away from an agreement or treaty, the other party or parties may, of course, then choose to treat us in ways in which we prefer to not be treated. But again, they simply cannot sanction us with fines or loss of property without our consent. Our elected officials may agree to be bound by certain international rules or obligations whenever they decide the mutual pledges of other nations are in our national interest. But whenever “We the People” disagree with those decisions, we have the opportunity to unbind ourselves by electing either a new president, a new Congress, or both.

When it comes to our trade relations, the WTO is singled out for usurping US sovereignty. It doesn’t. It is simply a voluntary organization of trading nations attempting to come to consensus on accepted trade rules. Once rules are agreed upon, the organization attempts to arbitrate and it makes rulings by interpreting those rules. The WTO itself doesn’t initiate action and has no ability to enforce dispute settlement rulings other than by authorizing a complaining (winning) member government to deny a responding (losing) member government some of the benefits of membership. The WTO is a most imperfect organization that is in constant need of reform. But it usurps no US sovereignty, and we have more global trade benefiting the United States because of it.


In the final analysis, the most important reason anyone calling themselves a conservative should remain committed to trade has nothing to do with economics. Instead, it has everything to do with securing “the Blessings of Liberty to ourselves and our Posterity,” something for which our Founders risked their lives, fortunes, and sacred honor. Trade should not be viewed as a matter of discretionary foreign policy or a lever to promote economic nationalism. And although the data and historic evidence is overwhelmingly convincing that trade leads to greater economic growth, ultimately trade remains an issue of personal freedom, specifically economic freedom and its relation to private property. To “Buy American” should not be a matter of where one buys. For conservatives, it should instead be a matter of how one buys, and that how is with freedom of choice. If the conservative movement is to still stand for freedom of speech, freedom of enterprise, and freedom to bear arms, as a matter of principle it must firmly and unequivocally stand for freedom of trade.

To read the full essay published by the Cato Institute, click here.


The Progressive Case for Globalization


Globalization has transformed the world. Centuries ago, it brought exotic spices and wares to distant corners of the globe. More recently, it has allowed us to work, see our families, and live our lives despite the disruptions caused by a once‐​in‐​a‐​lifetime pandemic. Trade in particular is a major component of globalization, which has lifted over a billion people out of poverty, made us more productive, and contributed to peace. Despite this, globalization and trade are under attack.

US Trade Representative Katherine Tai argued that the traditional approach to trade, focused on economic efficiency, has contributed to “a race to the bottom.” Meanwhile, President Biden has been beating the drum for his Made in America approach, even if it harms ties with our allies. Defending President Biden’s “Invest in America” agenda, Heather Boushey, member of the president’s Council of Economic Advisers, stated that “the global trading system has not always been fair, not always delivered the promised benefits to our citizens, [and] too often favored large corporate interests over workers’ interests.” The administration has thus called for a “new Washington consensus” but still has not answered the question posed by Jake Sullivan: “How does trade fit into our international economic policy, and what problems is it seeking to solve?”

What is striking about these statements is how far removed they are from traditional progressive views on trade and globalization, namely, that domestic and international prosperity are interlinked, that trade institutions support the rule of law, and that globalization is a tool for advancing well‐​being among the poorest. Trade has thus been peripheral to the Biden administration’s foreign economic policy. The shift in Washington toward favoring protectionist policies over trade openness is not only bad policy, but for progressives now calling for a new approach to trade, it also cuts against the very goals they are trying to achieve.

Tariff Liberalization as a Progressive Project

Economic turmoil and global conflict during the first half of the 20th century prompted a bold rethink of the international order. President Franklin Delano Roosevelt led the charge, overcoming fractured views on trade within his own party. The pragmatic and strategic vision of his secretary of state, Cordell Hull, helped him recognize the necessity of international economic cooperation to generate peace and prosperity at home and abroad. Roosevelt saw firsthand the devastating economic and social consequences of the Great Depression and acknowledged the role of trade barriers in deepening the crisis.

In a 1936 speech in Buenos Aires, Roosevelt criticized countries for their “attempts to be self‐​sufficient,” which “led to failing standards for their people and to ever‐​increasing loss of the democratic ideals in a mad race to pile armament on armament.” He called these policies “suicidal” and lamented that despite the suffering they caused, “many … people have come to believe with despair that the price of war seems less than the price of peace.”

The United States was no stranger to such policies. As post–World War I reconstruction was underway, European producers reemerged in the international market, fueling competition as they increased their exports. In the United States, amid a backdrop of economic uncertainty, many advocated for restrictive trade remedies that eventually culminated in the 1930 Smoot–Hawley Tariff Act, which led to an average tariff increase of 20 percent. Though originally intended to shield the agricultural sector from foreign competition through targeted tariffs, congressional logrolling greatly expanded the scope of the act to cover a broad range of products.

Unsurprisingly, its implementation sparked retaliatory measures from US trading partners, which included tariffs and quotas on products primarily imported from American producers, as well as widespread boycotts of American goods. While American exporters faced higher barriers to market access abroad, American consumers saw increases of between 4 and 6 percent in the relative price of imports, further reducing purchasing power and raising the cost of living. Though the tariffs did not bring about the Great Depression, economic historian Douglas Irwin notes that they contributed to both a “severe deterioration in trade relations in the early 1930s” and a global embrace of trade protectionism.

On the campaign trail in 1933, Roosevelt lambasted President Herbert Hoover and Republican leaders for the Smoot–Hawley tariff, saying that “President Hoover probably should have known that this tariff would raise havoc with any plans that he might have had to stimulate foreign markets,” and that the tariff was “the road to ruin, if we keep on it!” Retaliation from US trading partners was a major concern, making it difficult to sell products even to “logical customers, your neighbors across the border.” Roosevelt had another idea, which came from Hull, for “a tariff policy based on reason … a tariff policy based in large part upon the simple principle of profitable exchange, arrived at through negotiated tariff, with benefit to each Nation.” While Roosevelt was primarily concerned with economic stability in the United States, he was aware that this could not be achieved alone. In fact, he quickly recognized the symbiotic relationship between domestic recovery and the health of global trade.

The challenge, however, was that FDR lacked the authority to reduce trade barriers because the Constitution vests Congress with the power to regulate foreign commerce. Roosevelt and Hull thus jointly urged Congress to adopt the Reciprocal Trade Agreements Act of 1934 (RTAA), which, once passed, would empower the executive branch to negotiate tariff reduction agreements based on the principles of reciprocity and mutual benefit. Roosevelt explained that “by reducing our own tariff in conjunction with the reduction by other countries of their trade barriers, we create jobs, get more for our money, and improve the standard of living of every American consumer.” Furthermore, by increasing the authority granted to the executive branch, the RTAA reduced the impact of parochial interests in trade policy, since the president represented a national constituency.

Though many sensitive domestic industries retained trade protections, the RTAA marked a turning point in US trade policy. Not only did trade critics consider it to be fairly managed, it also found support among 71 percent of Americans. That did not mean its renewal did not face opposition in Congress, but as the United States entered the Second World War, sensible tariff policy became an instrument beyond domestic economic recovery and would serve as the foundation for a new international economic order guided by pragmatism, cooperation, and shared prosperity.

International Peace, Alliances, and the Rule of Law

Domestic economic recovery was not the only motivation for transforming the global economy defined by a liberalized trade regime. Rather, trade proponents strongly believed that deep economic integration would boost international peacebuilding and result in a freer, fairer world.

This idea is not new. In 1795, Immanuel Kant outlined how a constitution for civil law among nations could overcome the law of nature and create the conditions for perpetual peace. A key component of this was universal hospitality, which could make, among other things, “commerce with native inhabitants possible” so that “distant parts of the world can establish with one another peaceful relations that will eventually become matters of public law, and the human race can gradually be brought closer and closer to a cosmopolitan constitution.” The freedom to engage in commerce and avoid plunder was thus considered an important aspect of establishing a peaceful international community.

While the academic debate over the pacifying effects of international trade is ongoing, scholars agree that trade is an important variable that contributes to peace, though they place different weight on the explanatory power of liberal philosophy versus structural factors, such as liberal institutions, and the conditions under which the relationship is most salient. Reflecting on his own experiences, Hull described his personal realization of the idea that trade could lead to peace:

When the war came in 1914, I was very soon impressed with two points. The first was its terrific commercial impact on the United States. I saw that you could not separate the idea of commerce from the idea of war and peace.… And the second was that wars were often largely caused by economic rivalry conducted unfairly. I thereupon came to believe that if we could eliminate this bitter economic rivalry, if we could increase commercial exchanges among nations over lowered trade and tariff barriers and remove unnatural obstructions to trade, we would go a long way toward eliminating war itself.

Hull’s recounting provides further evidence for the argument that managing economic security concerns became a central issue for the architects of the postwar international order. One such way to address these concerns was through a framework of rules that would lower barriers to trade and provide for the peaceful settlement of disputes. The first step to achieve this was the General Agreement on Tariffs and Trade (GATT), which helped facilitate open trade relations based on the principles of reciprocity, nondiscrimination, transparency, and enforceability. At the launch of the GATT negotiations, Roosevelt made the case before Congress for why US participation was so important, noting that “the purpose of the whole effort is to eliminate economic warfare, to make practical international cooperation effective on as many fronts as possible, and so to lay the economic basis for the secure and peaceful world we all desire.”

By establishing a rules‐​based system, the GATT prioritized a predictable trade environment that would prevent the resurgence of the protectionist policies that worsened the economic instability and political conflicts of the first half of the 20th century. However, the GATT needed to be updated and expanded through successive rounds of negotiations that moved beyond simple tariff barriers. Another Democratic president was responsible for one of the most important rounds of GATT negotiations, which was eventually named after him—the Kennedy Round.

Prior to starting those talks, John F. Kennedy had secured authorization from Congress for additional tariff cuts up to 50 percent under the Trade Expansion Act of 1962. Upon signing the legislation, Kennedy remarked that “this act recognizes, fully and completely, that we cannot protect our economy by stagnating behind tariff walls, but that the best protection possible is a mutual lowering of tariff barriers among friendly nations so that all may benefit from a free flow of goods.” Kennedy argued that expanding trade would not only strengthen the US economic position but also bolster US alliances and, in doing so, help counter the threat posed by communism. He thus called the Trade Expansion Act “an important new weapon to advance the cause of freedom.”

International institutions were central to advancing these goals and supported a strong belief in the centrality of the rule of law and fairness that undergirds the progressivism movement. In a 1942 radio address, Hull explained why Americans should support US involvement in the war, stating that “liberty under law is an essential requirement of progress.” Liberty, to Hull, was “more than a matter of political rights.” In fact, he argued that the United States had “learned from bitter experience that to be truly free, men must have, as well, economic freedom and economic security.” Extending that internationally, Hull argued for “cooperative action under common agreement,” which “will enable each to increase the effectiveness of its own national effort.” Fifty‐​two years later, to mark the signing of the Uruguay Round Agreements Act that established the World Trade Organization (WTO), President Bill Clinton also made the case for “a fair and increasingly open world trading system that allows the free market to work and rewards the most productive people in the world,” as a means to “restore stability to the lives of the working people of our country.” Economic security at home, it was understood, required international institutions based on the principle of fair competition, which would facilitate access to economic opportunities.

An important way to assure fairness is to have a system of rules that applies equally to all and a means of recourse when those rules are violated. At the WTO, that has been the dispute settlement system, which allows countries to peacefully resolve trade disputes among themselves. What is truly amazing about this system is that even the smallest countries have access to it, and throughout most of the organization’s history, no country has seen itself as above the law.

A rules‐​based trading system was therefore always a precondition for economic interdependence that would be fair and accessible to all. Today, economic interdependence is still a core principle of liberal internationalism, though in Washington policy circles it has become less valued over time. Part of this stems from a loss of confidence in the rules‐​based order. President Biden’s national security adviser, Jake Sullivan, questioned “the premise that economic integration would make nations more responsible and open, and that the global order would be more peaceful and cooperative,” arguing that “Russia’s invasion of Ukraine underscored the risks of overdependence.” Tai shares this view, when in response to a question about how Russia’s invasion of Ukraine had upended the accepted wisdom of trade promoting peace, she said, “Peace is probably more necessary for prosperity than prosperity is for peace.”

Each of these arguments veers far from the progressive views toward trade and interdependence held by Roosevelt (whose portrait hangs above the fireplace in President Biden’s Oval Office), as well as other progressives. They also fail to understand the nuance in the trade‐​promotes‐​peace literature by arguing that the presence of any conflict disproves the theory that economic integration reduces the frequency and scope of conflict. Furthermore, as political scientist Daniel Drezner points out, complex interdependence made it difficult for Russia’s closest geopolitical ally, China, to provide strong public support for the war in Ukraine. In fact, he argues that China’s links to the global economy and Western countries in particular curbed its behavior by tipping the cost–benefit analysis to favor adopting a less prominent role in the war. The Russia–Ukraine war thus reveals that while interdependence does not eliminate all security concerns, the liberal international order still effectively constrains aggressive foreign policy behavior and fosters collective responses. This is precisely why, in his famous address at American University in 1963, Kennedy remarked that “even the most hostile nations can be relied upon to accept and keep those treaty obligations, and only those treaty obligations, which are in their own interests.” A material interest in accessing markets can thus moderate a country’s behavior.

The loss of faith in the power of interdependence as a restraint and the benefits of a system based on rules appears to be the new consensus in Washington, perhaps best executed by former president Donald Trump. Under his administration, the United States launched a series of trade wars that not only resulted in significant economic harm at home and retaliation that soured relations with our closest trading partners but also undermined the rules‐​based trading system. Though President Biden has made important strides in improving relations with our allies, on trade, he has largely preserved, and defended, some of Trump’s most controversial policy actions.

For example, when the metals tariffs that were applied for alleged national security concerns were found to violate international trade rules, Adam Hodge, who was then a spokesperson for the US Trade Representative, denounced the ruling, saying that “the United States strongly rejects the flawed interpretation” of the rules and that “issues of national security cannot be reviewed in WTO dispute settlement.” To make the US objection clear, he went on to say, “We do not intend to remove the Section 232 duties as a result of these disputes.” What is interesting about the Biden administration’s position is that in saying its actions are above the law, the United States has now established a slippery slope whereby other countries can claim national security interests as cover for trade protectionism.

The US approach to trade has shifted far from its progressive roots in another important way as well. The spirit of cooperation and need for predictability that underscored the postwar institution‐​building efforts are also under threat, not just with adversaries but with allies too. Discussing the sunset review of the United States‐​Canada‐​Mexico Agreement, Tai stated that “the whole point” of the negotiations “is to maintain a certain level of discomfort, which may involve a certain level of uncertainty.” During the Trump administration, uncertainty was a driving strategy of trade policy.

The problem with uncertainty, however, is that it breeds confusion, economic disruption, loss of trust, and hesitancy over making commitments. This is the direct opposite of what motivated the architects of the modern international trading system and its most steadfast champion, the United States. The last expression of those progressive ideals was shared by former US Trade Representative Michael Froman in his exit memo, where he wrote: “Through our trade policy, we bolster our partners and allies, lead efforts to write the rules of the road for fair trade among partners, and promote broad‐​based development. Trade done right is essential for our economy here at home and for America’s position in the world.” In contrast, US policymakers today have increasingly embraced a more zero‐​sum logic and thus failed to appreciate the importance of leading by example on trade and other foreign economic policies.

Tackling Poverty and Promoting Shared Prosperity

Though many advocates of trade protectionism today often point to levels of global inequality, stalled development, and middle‐​class stagnation as justifications for de‐​globalization, the evidence paints a more positive picture of globalization. In fact, looking at indicators such as life expectancy, infant mortality, literacy, and living standards, the story of the era of globalization is one of considerable progress and declining inequality.

From 1990 to 2019, the share of the global population living below the poverty line—set at $2.15 per day based on 2017 prices—decreased from 38.01 percent to 8.98 percent. Economist Kimberly Clausing explains that within China alone, “the share of the population living in poverty fell from 88 percent of the population to 2 percent of the population between 1980 and 2012,” suggesting that a billion people were lifted out of extreme poverty due to China’s economic opening. The negative correlation between trade openness and poverty levels is difficult to dispute, especially considering that regions with the most stagnant economic growth are those that maintain high tariff barriers and have therefore seen slow trade growth, such as sub‐​Saharan Africa. In addition to reducing poverty, expanded trade led to increased gross domestic product (GDP) growth. Economists Gary Hufbauer and Megan Hogan estimate that without post–World War II trade liberalization, US GDP would have been $2.6 trillion lower in 2022, at $22.9 trillion instead of $25.5 trillion, averaging to welfare gains of $19,500 per household in 2022. These gains from trade have broadly benefited consumers and reduced inequality. The Cato Institute’s Chelsea Follett explains that this time period has also witnessed considerable progress toward raising living standards worldwide.

While small changes to tariff rates may appear inconsequential, the WTO estimates that universal withdrawals from free trade agreements and increases in most‐​favored‐​nation tariff rates would decrease real income by 0.3 percent and 0.8 percent within three years, respectively. The 6 percent increase in food prices in the United Kingdom following Brexit offers a potent example of this effect, when the cost of living increased 50 percent more for low‐​income households compared to high‐​income households. Critically, these costs were not evenly distributed, as lower‐​income households spend a higher portion of their income on imported items than high‐​income households.

Worsening this disproportionate effect is the fact that trade barriers raise the cost of goods and services and reduce the choices available to consumers. Recently, the 2024 Economic Report to the President highlighted that US imports from China were “accompanied by a substantial fall in US consumer prices, with disproportionate benefits accruing to low‐ and middle‐​income households because they have higher shares of tradable goods like food and apparel in their consumption baskets.” In the United States, it’s particularly striking that cheaper consumer goods typically maintain higher tariff rates than equivalent luxury products.

Ed Gresser, vice president and director for trade and global markets at the Progressive Policy Institute, identified this trend across the US tariff schedule and found, for example, that the tariff rate placed on steel spoons is five times higher than the rate placed on silver spoons. Similarly, while a cashmere sweater has a 4 percent tariff rate, wool sweaters have a 17 percent rate, and acrylic sweaters have a 32 percent tariff rate. This makes the US tariff schedule a regressive tax whereby low‐​income households are not only spending a higher portion of their income on imported items, but they are also paying a higher average tariff rate on those purchased goods. A growth in protectionist measures would exacerbate these inequities.

However, since the gains from trade are often diffused throughout the economy, they can often go unnoticed and are given less attention than trade costs, which are often concentrated. As a case in point, the “China Shock” serves as a common talking point for critics of globalization, even though the findings of the famous study that coined the term have been strongly contested.

In placing so much emphasis on concentrated and marginal direct employment losses, globalization’s critics also fail to see the widespread economic benefits of trade through greater competition with foreign producers, which results in lower prices for consumers and limits domestic firms’ ability to pursue monopolies, as Clausing explains in her book, Open: The Progressive Case for Free Trade, Immigration, and Global Capital. On the other hand, Clausing also calculates that “protectionist measures cost consumers as a group, on average, over $500,000 per job saved” through added taxes caused by higher tariffs. In some industries this cost is more extreme; according to economist Anne Krueger, “it is estimated that the annual cost of one job ‘saved’ in the steel industry is about $900,000.” These unemployment‐​based evaluations also ignore that lower tariff rates reduce the costs of intermediate goods for domestic manufacturers, which in turn leads to greater production capacity and hiring ability. Final made‐​in‐​America products are thus cheaper because of these foreign intermediate inputs, increasing their market competitiveness.

Clausing thus analogizes the trade shock to technology shocks: While advances in technology can reduce the demand for some jobs, they simultaneously increase productivity and efficiency, create many new job opportunities, and benefit everyday users. It would be unusual to come across someone who would argue that the internet should not have been broadly adopted for the sake of conserving a small portion of jobs. This is not to suggest that these shocks are not serious policy concerns; rather, it is intended to demonstrate that imposing protectionist measures to save jobs will fail to achieve the desired effect and instead will reduce economic growth and impose widespread costs. Broadly speaking, these negative externalities should be remedied through more robust public policy instead of trade restrictions to assist Americans in adjusting to economic disruptions.

As one of the report’s authors, Gordon Hanson, later remarked in Foreign Affairs, though the China Shock “hurt many US workers and their communities … so, too, have automation, the Great Recession, and the COVID-19 pandemic. And because the scarring effects of job losses are the same whether imports, robots, or a virus is responsible, responses to the damage should not depend on the identity of the culprit.” He therefore argued that protectionist measures “will do little to help workers who are already hurting or to help others avoid a similar fate” and that instead, the president “should establish targeted domestic programs that protect workers from the downsides of globalization.”

Though trade generally acts as a positive force, challenges persist. The economic disruptions and global health crisis caused by the COVID-19 pandemic drove many countries, including the United States, to grow wary of globalization, leaning away from international trade cooperation in favor of a more protectionist and at times fragmented system. However, the presumption that the optimal solution to these global challenges lies solely in unilateral or regional action is flawed. As WTO director‐​general Ngozi Okonjo‐​Iweala noted in the World Trade Report 2023, “a retreat from economic integration would roll back recent development gains, make it harder for countries to grow their way out of poverty, and harm future economic prospects for the poorest people the most.” In other words, fragmentation would only exacerbate existing challenges.

The World Trade Report instead advocated for addressing the world’s most pressing challenges through greater global openness, integration, and cooperation, contingent on the reform of the international trading system. This approach, termed “re‐​globalization,” aims to integrate more economies into the global trading system and to promote a more equitable, transparent, and reliable trading framework. As President Barack Obama once stated, “globalization is a fact,” and while the United States can’t “build a wall” around globalization, he said, “what we can do is to shape how that process of global integration proceeds so that it’s increasing opportunity for ordinary people.”

The United States has long shaped that process. In fact, it was American leadership in the global economy that established the WTO, which President Clinton described as “a victory for a couple of simple ideas.” Essentially, “the idea that America can lead in the 21st century, that we need not fear competition, that we want our neighbors to do better than they have been doing, and when they do better, we will do better.” Though the belief that a rising tide can lift all boats is no longer in vogue in Washington, it has been a driving force for US engagement in the world economy and has contributed to a healthier, wealthier, and more stable world.


US leadership in the global economy is needed now more than ever, yet there is no need to rethink the entire trading system. The blueprint is well known, and as this essay shows, the driving force behind the modern trading system is deeply rooted in American values. Many progressives have called this system unfair. No institution is perfect, and it is true that the WTO and US trade agreements as we have known them would benefit from reform. However, their critics have lost sight of the very real benefits globalization and trade have provided and have also forgotten the progressive ideas that helped shape the international trading system after the Second World War. That system has not only reduced poverty but has also promoted shared prosperity, at home and abroad. Progressives would do well to remember these achievements and their important part in securing them.

To read the full essay published by the Cato Institute, click here.