Biden and Trump dabble in tariffs, but real trade reform is worth the cost

It wasn’t that long ago when both major political parties seemed to be approaching a consensus on tariffs: that they shouldn’t exist. Free trade was going to drop prices on consumer goods here at home and liberate the developing world, with prosperity and democracy following in its wake.

That was the feeling in the ‘90s, anyway, when President Bill Clinton and legislators of both parties agreed on the North American Free Trade Agreement (NAFTA) and the admission of China into the World Trade Organization. Fighting over tariffs, by that point, felt like something out of a history book.

But history sometimes repeats itself, especially when that elite consensus does not match the mood in the country at large. Today, tariffs are back on the menu — and both parties are pretending to like them.

That’s a considerable shift for Washington, but it shouldn’t be too surprising. Even as Clinton and President George H.W. Bush were campaigning on the upside of the then-pending trade agreement between the U.S., Canada, and Mexico, Ross Perot rose to prominence by talking about all the jobs that would be lost in the process. But Perot lost, and the free trade movement kept on rolling. China’s accession to the WTO opened its markets — and ours — to freer trade. It was supposed to make it richer and, the theory went, freer and more democratic.

That was a fine dream, but it didn’t work out.

China got richer, but only more authoritarian (and now more imperialistic). All the while, there were people who doubted that free trade with unfree nations would benefit the American worker, but the leadership in both parties thought those voices were outdated.

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A quarter century later, free trade is in retreat. In 2016, the GOP nominated Donald Trump, a man whose positions on many issues had flipped so often that no one knew what he really believed. One exception, though, was trade. Trump has always been a protectionist, an opponent over the years of trade with Japan, with Mexico and Central America, and then with China. With another Clinton heading the Democratic ticket and pushing more Asian free trade through the Trans-Pacific Partnership (TPP), we saw the first presidential campaign clash on trade in decades.

This time, free trade lost.

The hollowing out of American manufacturing, and the loss of blue-collar jobs that followed, has caused a lot of people to rethink that old, optimistic consensus about free trade. One of those who has conveniently changed his mind this year? Joe Biden.

Biden eagerly followed his party’s Clintonite turn into free trade. He voted for NAFTA in 1993. He voted for freer trade with China in 2000. As Barack Obama’s vice president, he supported the TPP in 2015. When running for president in 2020, Biden said that “America’s farmers and manufacturers are getting crushed” by Trump’s tariffs on China.

But a funny thing happened on the way to the White House: After he was elected in 2020, Biden never did get around to repealing those “temporary” tariffs Trump imposed. Instead, he dithered on tariffs for three years, and then, with the 2024 election approaching, he actually raised them instead. Administration officials paint this as a response to “unfair trade practices,” but China is not doing anything now that it hasn’t been doing for more than a decade. The only thing that’s changed is that Biden needs to show American workers in the manufacturing sector he’s “getting tough” on China.

He’s not, not in any meaningful sense. Like Trump, Biden has taken temporary action in raising tariffs but is expecting the entire manufacturing sector to readjust its whole supply chain on a permanent basis. It will not do so.

Biden is acting under authority in Section 301 of the Trade Act of 1971, which lets the president raise tariffs in response to foreign conduct that is “unjustifiable or unreasonable” and acts to “burden or restrict United States commerce.” That’s why the administration is emphasizing the “unfairness” of China’s export policies. And they are unfair — they have been for years. But they will not stop being unfair, nor will manufacturers bring production back to this country, based on a temporary tariff.

Permanent changes in our trade policies might produce such results. While industry leaders will not build an entirely new factory based on a president’s whim (which can be reversed at any time), they might shift production based on a permanent law. But that would require the hard work of weighing costs and benefits and getting Congress to act. That’s how tariffs were enacted in those history books, and elections were fought over them. But Biden, like Trump, prefers to rule by decree, not by law.

They’re at least both making decrees in the right direction, and there are benefits to trade protection that both the left and right can support. The obvious one — the one candidates like to mention — is that higher tariffs make domestic production more competitive. Consider the pending sale of U.S. Steel to a Japanese company, Nippon Steel. Every politician in the commonwealth opposes this deal, but it’s exactly what trade protection is supposed to do: lead companies (even foreign companies) to invest in manufacturing here, rather than bringing in cheaper products from abroad.

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There are also benefits to the environment from producing goods domestically. China relies on coal power, and, to the extent it has environmental regulations, it is anything but transparent about how they are enforced. Domestic production (or production in a similar nation like Canada) is guaranteed to be greener, even before considering the pollution costs of shipping across the ocean.

The human rights benefits also favor trade protection against China. Even when Chinese goods are not produced by enslaved Uyghurs in prison camps, they are often made by child labor, as our federal Department of Labor has confirmed. And even when the workers are free adults, their rights to organize and bargain collectively are nonexistent outside the government-controlled All-China Federation of Trade Unions. Not exactly a workers’ paradise.

But it’s not all upside — no government policy ever is.

Tariffs make your goods more expensive. Biden acknowledged this in 2019 when it was Trump imposing the tariffs. Now that they’re his idea, Biden pretends the cost is fully absorbed by China. There will be winners and losers under any trade regime; our politicians should acknowledge this and work within the legislative process to arrive at a solution they think is best for the average American.

Instead, though, we get Biden and Trump beating their chests at China and pretending temporary fixes will do anything but boost their polling numbers. Trade protection is back from the dead; our politicians should engage the idea honestly, not just in talking points.