The Bipartisan Consensus to Destroy U.S. Trade Policy



Daniel Ikenson | Cato Institute

On June 17, U.S. Trade Representative Robert Lighthizer testified before the House Ways and Means and Senate Finance committees. The hearings were billed as opportunities for Congress to raise questions and air concerns about the Trump administration’s trade policy actions and priorities. Instead, through more than seven hours of statements and discussion, lawmakers from both chambers and both sides of the aisle confirmed a general harmony with the administration’s trade policy performance.

How else to explain the dearth of probing inquiry and push back? With a few limited exceptions, the day featured a series of softball questions from lawmakers showing deference to Lighthizer, praising him for focusing on enforcement rather than liberalization in the United States‐​Mexico‐​Canada Agreement, and appearing to be squarely on board with the prosecutorial, mercantilist, zero‐​sum approach that has defined trade policy in the Trump era.

Given the administration’s abrupt U‐​turn from eight decades of trade policy continuity through 13 presidencies and 42 congresses to take actions that have left Americans much less free to trade and that have weakened U.S. standing in the world, the absence of serious questioning and substantive disagreement is, if not an endorsement, a dereliction of duty. The fact that media and others haven’t found newsworthy this congressional acquiescence to the president’s policies or this general comity between the branches may be further confirmation that it’s been, well, an eventful few years. Just consider some of the administration’s deeply controversial trade actions and where they have taken us since 2017.

On his third day in office, President Trump withdrew the United States from the Trans‐​Pacific Partnership—arguably the most important trade agreement in a generation—for the robust reason that the TPP was an accomplishment of the Obama administration.

Over the ensuing two years, Trump imposed new tariffs on close to $400 billion of imports, resulting in a $38 billion tax increase on importers, which was passed down through supply chains, raising costs of production across the manufacturing sector and consumer prices across the country. Of course, those tariffs also invited retaliation from foreign governments against close to $200 billion of U.S. exports, which hit the agricultural sector particularly hard. To try to smooth things over with the farmers, Trump showered them with $28 billion of taxpayer funds and—if John Bolton is to be believed—begged Xi Jinping to buy their soya beans.

Meanwhile, the United States and China have been embroiled in a divorce which began as a trade war but has escalated into a broader process of economic, financial, technological, and cultural decoupling. Whether confronting China as the administration did was a good idea or not, there is no evidence the architects of that approach have—or even considered—a plausible plan for U.S. success in the world, post‐​divorce.

A case in point is that in the midst of the meltdown with China, the administration has gone out of its way to pick fights with as many other countries as possible, hitting allies with national security tariffs on steel and aluminum, threatening similar tariffs on automobiles, allowing (in fact, encouraging) wholesale abuse of the antidumping law to punish foreign (especially Korean) producers, and withdrawing tariff preferences granted to products from poor countries. We should be wooing, not screwing these countries.

The administration has routinely menaced allies and other trade partners with threats of tariff hikes and other economic sanctions to pressure them into caving to Trump’s demands. For example, just days ahead of today’s entry into force of the USMCA, the administration began threatening to re‐​impose tariffs on Canadian aluminum and to file formal complaints against Mexico for alleged non‐​compliance with various terms of the new North American trade deal. Disputes and more disputes mark today’s commencement of the USMCA.

Now, a trade war with Europe over digital taxes, aircraft subsidies, and other matters is looking increasingly likely. Certainly, some of the EU’s policies are problematic and warrant cogent, coherent policy responses, but the Trump administration has gone out of its way to demonize Europe, even calling it a bigger threat to the trading system than China.

The administration’s war of attrition on the World Trade Organization shows no signs of abating. By blocking its capacity to render formal adjudication, failing to participate constructively in the process of debating prospective reforms, and perpetuating myths to foment antipathy ahead of what looked like possible votes in both chambers on the question of U.S. withdrawal from the WTO (until House Speaker Nancy Pelosi invoked a procedural privilege last week to prevent a vote on the subject in this Congress, which could go down as the most, if not the only, pro‐​trade action taken by this Congress), the United States has become an international scofflaw under the Trump administration.

As if picking fights with the rest of the world weren’t enough, the administration continues to flout the powers Congress errantly ceded to the executive branch by abusing trade laws passed with too few conditions attached. The administration has demonstrated contempt for the rule of law in its exercise of authorities under several statutes, as if daring Congress to do something about it. But Congress doesn’t really want to do anything about it because most members are perfectly happy allowing the president to make politically consequential decisions about tariffs, while they remain on the sidelines cheering for the measure if it’s popular, and criticizing it if it’s not. That’s not exactly a profile in courage.

So, what does the administration have to show for all its posturing, chest‐​thumping, and bullying? Approximately zero trade liberalization—no new agreements that meaningfully reduce trade barriers—has been accomplished under this administration. The USMCA may succeed, but that bureaucratic bundle of restrictions and rules was never intended to liberalize trade. It was intended to reduce U.S. imports from Mexico and Canada and to incentivize the repatriation of supply chains. And it will make North America poorer. The mini‐​deal with Japan salvaged a tiny portion of the benefits of the TPP, but on net we are far less free to trade with Japan than would have been the case under TPP. The revisions to the Korea-U.S. (KORUS) free trade agreement, which the administration touts, were so superficial that Congress didn’t even need to sign off on it. What about the U.S-UK and the U.S.-Kenya Free Trade Agreements, you ask? Please. Neither stands a chance of coming to fruition with any meaningful terms during the Trump administration.

Yet, despite all these unorthodox actions (and inactions), which amount to the destruction of trade policy as a tool to promote economic growth and to channel U.S. soft power, Congress couldn’t muster the will to ask why.

At the recent hearings, there were no substantive objections; no challenges of the administration’s logic; no repudiation of the president’s disdainful treatment of allies or the frivolity of his national security tariffs; no queries about the corrupt tariff‐​exemption racket run out of the U.S. Commerce Department; no expressions of concern that the president’s contempt for decorum, his aversion to decency, and his departure from history have come at great expense to the country’s reputation—a public asset that the administration wantonly squandered. There were no eyebrows raised over the administration’s trivializing the rule of law and brazenly asserting the law of the jungle. There were no reprimands for taxing U.S. businesses with tariffs and redistributing the booty to the constituencies more likely to support the president’s reelection. There was only silence; gleeful silence.

The failure of Congress to muster up any genuine resistance to this long list of abusive, destructive executive actions reveals ineptitude, cowardice, and/​or complicity in America’s retreat into protectionism. After all, the administration’s effort to re‐​purpose trade policy from a tool that harnesses economic dynamism and creates opportunities into a shield that aims to protect Americans from the effects of that dynamism, which many congressional Republicans now support, has long been the objective of congressional Democrats.

At long last, that vaunted bipartisanship has returned to Washington in the form of an insular, mean‐​spirited, grievance‐​propelled trade policy. It shouldn’t be surprising that politicians agree that the causes of America’s woes are foreign born. It’s a safe, slam‐​dunk position to take. But it’s also dangerous and wrong and very likely to accelerate the country’s isolation and decline.

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