Recently, President Trump has made headlines by calling for across the board 25% tariffs on steel and 10% tariffs on aluminum. He also suggested that trade wars are good and that the United States can easily win them. I’m not going to go into the math of why trade wars are bad for all parties and free trade is a net good. Instead, as a fan of free trade, I’m going to offer a compromise solution that I believe is both politically feasible and economically rational: free trade with free countries.
My premise is simple. Countries that protect and respect political rights are more likely to protect and respect human rights and therefore labor and economic rights, as well. When combined with an advanced economy, these countries are more likely to have labor costs that are similar to America’s in many sectors. This implies that, on balance, truly free trade with these countries is unlikely to disproportionately harm American workers and consumers.
America’s current free trade regime is based upon at least three main premises:
The first premise has turned out to be true, with the caveat that American companies often have their intellectual property stolen or are required to share it as a condition of operating in certain non-democratic countries.
The second premise is also true, with the caveat that free trade alone is likely insufficient to combat global poverty. It works in conjunction with such things as land reform, increased industrialization, and social development and poverty reduction programs.
The third premise likely doesn’t have enough evidence to wholeheartedly support or dismiss it, but anecdotally, it is clear that there are countries like China and Russia, that we have (relatively) free trade with, that have made little or no progress on substantive democratic reforms.
Although it is clear that most of the manufacturing job losses in the United States are due to automation, not trade, it is also clear that some non-democratic countries have been unfairly manipulating trade through measures such as (but not limited to) currency manipulation, forcible acquisition of intellectual property, and dire conditions for their workers. If free trade is not leading these countries closer to democracy, and in fact enables them to destabilize the current international order, then we really need to ask ourselves if free trade with these countries is in our best interest.
Penalizing our allies for having competitive advantages in some areas makes no economic or political sense. Their strength and prosperity enable our own. However, I suggest that we implement tariffs against countries that Congress deems insufficiently free and also against countries that Congress has determined have been systematically engaging in widespread anti-competitive abuses against American companies, products, and services.
I believe that both a domestic and international consensus can be reached that it is time to stop rewarding bad actors in the international system. Further, I believe that my proposal would address some of the concerns of American workers. It would make it clear to the world that on the issue of trade, America is willing to stand by its stated values. And it would provide an actual incentive to non-democratic countries to make real democratic reforms. (Here is Freedom House’s 2018 list of Free, Partly Free, and Not Free countries.)