One of the most curious aspects of the 2016 presidential election is how foreign trade has emerged as a bogeyman on both the left and right.
Republican Donald Trump and Democrat Bernie Sanders both railed against the North American Free Trade Agreement and Trans-Pacific Partnership in the primaries, though only Trump paired it with anti-immigrant — especially anti-Mexican — rhetoric.
At the beginning of last week’s presidential debate, Trump didn’t mince words: “NAFTA is the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country.”
Sanders fought NAFTA in Congress and made opposition to the TPP, as it is known, a centerpiece of his campaign: “The Trans-Pacific Partnership is a disastrous trade agreement designed to protect the interests of the largest multi-national corporations at the expense of workers, consumers, the environment and the foundations of American democracy.”
This is all pretty strong language for agreements that, at their heart, simply reduce the taxes (known as tariffs) on goods traded with other countries. The agreements mean Boeing jetliners and Intel microprocessors are taxed less by foreign governments, and we don’t tax Chinese toys and Mexican strawberries as much.
Why is open trade with other nations such an issue? Democrat Hillary Clinton seemed bewildered at the debate, replying to Trump, “Of course, we are 5 percent of the world’s population; we have to trade with the other 95 percent.”
Trump and Sanders both hit on trade because fear makes it an easy target. Many Americans are simply scared that lower-paid, and possibly harder working, Mexicans and Chinese will take their jobs.
Study after study has shown that trade’s benefits are widespread, but its harm is targeted. All of San Diego benefits from Qualcomm’s export success, but a small town in the Rust Belt reels when an inefficient family-owned factory closes.
The stories about individual factories closing resonate in a way that positive economic statistics don’t. And “Made in China” looks bad on Apple’s iPhones, even though most of the value is in U.S.-made computer chips and software.
Accompanying the fear is a sense of loss. Some voters think they remember a 1950s America of secure factory jobs, forgetting the reality of frequent layoffs and dangerous, monotonous work. Do we really want that life again?
Trump has famously promised to bring steel and coal back to Pittsburgh. But nowadays aluminum, plastics and carbon fiber have replaced steel, and coal is facing cheaper — and cleaner — natural gas from the U.S. fracking boom.
America has been down this anti-trade dead end before. The infamous Smoot-Hawley tariffs enacted in 1930, pushed by industrialists, arguably made the Great Depression worse. We almost succumbed to independent presidential candidate Ross Perot‘s warning of a “giant sucking sound” in 1992.
Interestingly, it’s usually businessmen like Trump and Perot who push for trade restrictions. Perhaps they just can’t take the competition?
The fact is the United States has the most dynamic economy in the world. We routinely create new industries and let less developed parts of the world take the old ones. We give up TVs to make personal computers, gasoline-powered cars to make electric ones, print publishing to launch Facebook and Google. This is why the U.S. economy continues to be the largest in the world, and the U.S. dollar remains the international reserve currency with no foreseeable challenger.
Pledging to repeal NAFTA and bring steel and coal back to Pittsburgh makes for great sound bites, but it’s not the future.
Chris Jennewein is editor and publisher of Times of San Diego.