Both parties obfuscate on trade deals

Our nation’s, or any nation’s, decisions to impose tariffs — taxes on a class of imported goods — are always a bad idea.

And yet, of course, those bad ideas abound, around the world.

Every international economist knows that. They see the simple truth, that tariffs are financial duties that end up being paid by consumers.

But in the end, it’s politicians, not academics, who make trade decisions for their countries. For reasons that are easy to understand, because it helps them get or stay elected, politicians either impose — as President Donald Trump did — or maintain — as President Joe Biden has — tariffs, because many voters see them as actions that “stand up” to manufacturers of “cheap foreign goods” and thus (supposedly) bolster domestic production, and thus, domestic jobs.

It doesn’t work that way, in the real world. National economies still produce what they are best at producing, whether that involves labor-intensive manufacturing or big-ideas intensive creativity or services.

But that’s a hard concept to get across to people. Political campaigns are, to put it mildly, not good at trafficking in subtleties. Understanding the economic evils of tariffs in international trade can seem counter-intuitive. An election year is almost never a time to hope for reason rather than playing to emotion when it comes to trade policy.

So here in the January of an election year, it’s not surprising — though it’s still disappointing — to see the Biden administration fumbling a chance to do the right economic thing by eliminating tariffs raised up by his predecessor.

That recent fumble took place in November, when the administration had been set to unveil a new trade deal at the Asia-Pacific Economic Cooperation summit in San Francisco.

Instead, at the last minute, the United States pulled back from its previously stated intention and dropped new rules on trade in its ongoing deal with 13 countries in the Indo-Pacific.

According to reporting in Politico, “Biden’s team unexpectedly punted the trade portion of the talks, after Ohio Sen. Sherrod Brown and other Democrats warned the proposal could hurt workers (and, implicitly, their election prospects). Even if the president’s agenda was designed to staunch the flow of jobs overseas, perception that it wouldn’t was what mattered most for Brown and at-risk Democrats across the industrial Midwest.”

Since the Republican Party has changed from one that was adamantly free trade to one that is adamantly protectionist, the president didn’t want to open himself up to defending policies that, even though they make perfect sense, don’t play well in Peoria.

Even so, Republican candidate Trump continues to hammer Biden for even staying in the Indo-​Pacific Economic Framework, which his administration had pulled out of. Trump was successful in his 2016 presidential campaign partly by hammering candidate Hillary Clinton for supporting the Trans-Pacific Partnership, TPP. Now, Trump said at a campaign rally, “Under the next administration … the Biden plan for ‘TPP Two’ will be dead on day one. It’s worse than the first one, threatening to pulverize farmers and manufacturers with another massive globalist monstrosity designed to turbocharge outsourcing to Asia.”

That is mere politics talking, and it is incorrect.

The fact is, the dropped, or perhaps postponed, changes in the trade agreement were milquetoast, relying again on unenforceable promises by Asian-Pacific trading partners to improve environmental and labor conditions in their own countries in exchange for lowered or dropped tariffs. Instead, as former Democratic Rep. James Bacchus, a Cato Institute scholar, notes in The Hill, “There is no reciprocity in the Indo-​Pacific framework in exchange for the higher standards sought by the United States.”

The United States needs presidents willing to educate, not obfuscate and pontificate, on matters of international trade.