Protectionist Trade Policy Is A Product Of The Swamp, President Trump

REUTERS/Jonathan Ernst

Michael McGrady Director of McGrady Policy Research
Font Size:

Recently, I had the pleasure of having a nice dinner with many of my colleagues in the media and political consultation spaces. We all met up at an excellent restaurant, we all ordered our food, and we got to catch up with one another.

I happened to reconnect with some of my old colleagues and clients while also meeting new folks from around the beltway and my good ole’ home state of Colorado. Nonetheless, the conversation found its way into the realm of our views on Donald Trump’s presidency, so far.

Being conservative and libertarian types, we all agreed that the Trump Administration was doing great things on the regulatory front—cutting regulations, becoming more business friendly, and opening up the markets. However, I dissented when it came to the question of whether the Trump Administration was making moves to be market friendly, not just business friendly.

Naturally, I said, “No, he’s not.” And, everyone looked astonished. So, considering the reaction I received I explained my reasoning. Roughly, my response was to the extent of: “there is still a difference between a pro-business government and a pro-market government.”

Everyone thought I was crazy. There is an excellent case to be made for my level of craziness; however, take a second to consider my reasoning.

Consider the push back the Administration received for appointing former Congressman Scott Garrett to the position of Export-Import Bank (EX-IM) chairman, as an example. Garrett is one of the many libertarian leaning Republicans who has been an outspoken critic of the EX-IM Bank. He was appointed to lead the agency. Why? In my view, to reform it.

Despite the intentions, many industry leaders and pundits chided the Trump pick as a “creature of the swamp” because of his “free-market background,” his affiliations with libertarian organizations and think tanks, and being one of the founders of the House Freedom Caucus.

The reason? They’re afraid of losing their corporate welfare.

EX-IM Bank, among other “benefits for business” the federal government grants, serves as a corporate slush fund that multi-national organizations use to create uncompetitive disparities in the marketplace.

Frankly, the opponents to a Garrett nomination are in love with the idea of the status quo and supporting one industry over another.

One of the other reasons why I said what I did at my dinner—of whom featured a current congressman and member of the House Freedom Caucus—was because we need to discuss Trump’s love affair with steel—and tariffs.

Just like EX-IM Bank and other financial handouts from the federal government, considering Section 232 trade restrictions on certain commodities is a highly inappropriate move for a president who supposedly wants to rebuild the American economy. Other heinous and idiotic ideas come out of the Administration’s so-called mission to put American products first over cheaper, foreign consumer goods. In fact, such pandering to the American working-class should serve as an insult for such individuals who are dependent on cheap, foreign-produced goods. Since when was buying a Chinese-made American flag such a crime?

The whole impetus of this rambling is that the Administration needs to move away from protectionism. Protectionism, as a concept, has great intentions. However, on paper and in practice (kind of like socialism), it fails to produce a truly competitive and open marketplace. That doesn’t mean current American jobs are going to get killed, either. In fact, it means the opposite…

Free trade would alleviate the cost. While a protectionist trade policy can create jobs, the costs will be significant, and companies will pass the costs on to their customers. One American Enterprise Institute study by scholar Mark J. Perry concluded that a protectionist trade policy from President Trump would “Make America Expensive and Poor Again,” not “great again.”

For example, President Trump’s push to revitalize the country’s steel industry—to bring back the robust manufacturing economies of the 1950s—has killed other manufacturing jobs in the process.

Without protectionist policies, economies can advance, innovate, and welcome the next generation of American industry. However, things will only get worst until Trump gets off his Twitter tirades and refers to his days of business school where he was taught free-market economic theory.