by Rod Williams, Nov. 1, 2024- Ever since the end of World War II up until the election of Donald Trump the Republican Party has been the party most committed to free trade. The presidents who were the strongest advocates of free trade were Ronald Reagan and George H. Bush. It was Reagan who described the Republican Party as a three-legged stool comprised of a coalition of fiscal conservatives, social conservatives and national security hawks. Free Trade was a major component of the party's fiscal conservatism.
Durning this post WWII period, opposition to tariff reduction usually came from Democrats responding to labor union pressure, but that was a minority position in the Democrat coalition. Under the leadership of Bill Clinton, the Democrat Party fully embraced free trade and opposition to free trade was from then on, a small fringe of both parties.
Donald Trump has changed that. Now, opposition to free trade is a major feature of Republican Party politics. It is surprising to me how many Republicans have jettisoned things they once believed in, in order to hold on to power or curry favor with Trump. One Republican who has not is former U. S. Senator Pat Toomey.
I know that anyone who does not kowtow to Donald Trump is denounced by Trump loyalist as a RINO, or swamp creature or member of the Deep State. Pat Tomney is a solid conservative. Durning his time in the Senate he was one of the most conservative members. The Club For Growth gave Toomey a rating of 93%. and the American Conservative Union Rating gave him a score of 100. Pat Tomney did not change, the Republican Party did.
Below are excerpts from an article in the Wall Street Journal where Senator Tomney explains why Trump's tariff proposal is detrimental to American workers and consumers.
About Trump’s ‘Reciprocal’ Tariffs
He wants to raise your taxes, and he thinks I’m the stupid one.
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| Senator Pat Toomey |
By Pat Toomey, Wall Street Journal, Oct. 27, 2024 - Donald Trump recently declared that only stupidity could explain my opposition to his reciprocal-tariff proposals. There are other explanations. Concern for Americans’ jobs and standard of living comes to mind.
I understand the emotional appeal of trade-rules reciprocity—it satisfies an urge for revenge. But that revenge will be less satisfying for the working-class Americans facing unemployment and higher prices if Mr. Trump carries through on his import-tax promises.
As I tried to explain to Mr. Trump when he was president, another country’s misguided decision to tax its citizens on what they buy from American manufacturers isn’t a good reason to punish Americans who wish to buy that country’s products. ... low taxes on imports give American consumers more choices, cheaper prices and a higher standard of living. Low tariffs also make American manufacturers more competitive ... Mr. Trump’s reciprocal tariffs would effectively allow other countries to determine how the U.S. taxes its own citizens.
No country has ever tariffed its way to prosperity. ... Today the nations with the highest tariffs are economic basket cases, ...
More than 20 years ago noble prize-winning economist Milton Friedman wrote a Newsweek column extolling the virtues of free trade. That column still rings true today. I assume most of you know of Milton Friedman. He was an author and advisor to presidents and advocate of markets. If political movements had patron saints, Milton Friedman would be a patron saint of the conservative movement.
Friedman on free trade
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| Milton Friedman |
October 1, 1993 - We have heard much these past few years about using the government to protect the consumer. A far more urgent problem is to protect the consumer from the government.
The immediate occasion for these remarks is the bill that is being considered by the House Ways and Means Committee to impose import quotas on textiles, shoes, and other products. Such a bill will, like present tariffs, raise prices to customers and waste our resources. Unlike present tariffs, it will not even yield any revenue to the government. The higher prices will all go to the producers—mostly simply to pay for higher costs. The consumer will be forced to spend several extra dollars to subsidize the producers by one dollar. A straight handout would be far cheaper.
The proponents of quotas say, "Free trade is fine in theory but it must be reciprocal. We cannot open our markets to foreign products if foreigners close their markets to us." Japan, they argue, to use their favorite whipping boy, "keeps her vast internal market for the private domain of Japanese industry but then pushes her products into the U.S. market and complains when we try to prevent this unfair tactic."
The argument sounds reasonable. It is, in fact, utter nonsense. Exports are the cost of trade, imports the return from trade, not the other way around.
Suppose Japan were incredibly successful in her alleged attempt to restrict imports into Japan, managing to dispense with them entirely. Suppose that Japan were incredibly successful in her alleged attempts to push exports to the U.S., managing to sell us large quantities of assorted goods. What would Japan do with the dollars she received for her exports? Take crisp greenbacks back to Tokyo to stash in the vaults of the Bank of Japan? Let deposits at U.S. banks pile up? Jolly for us. Can you think of a better deal than our getting fine textiles, shiny cars, and sophisticated TV sets for a bale of green printed paper? Or for some entries on the books of banks? If the Japanese would only be willing to keep on doing that, we can provide all the green paper they will take.
The Japanese might accumulate, as they have been doing, a moderate sum in greenbacks or dollar deposits or dollar securities as a reserve for possible future needs. But they are too smart to do so indefinitely. Very soon Japan would take steps either to reduce exports or to use the dollars to buy imports (by changes in trade restrictions, or in the internal price level, or in the exchange rate between the yen and the dollar). We would again be under the unfortunate necessity of having to pay in real goods for real goods.
But, you may say, what if the Japanese asked for gold? Like greenbacks, gold would be useful to them only as a reserve for future purchases. They would derive no current services from the gold any more than we do from the gold buried at Fort Knox. I for one would rather have the useful goods than the idle gold. But if the U.S. authorities thought differently, they could readily refuse to sell the gold for the dollars at a fixed price of $35 an ounce. In that case, Japan would again have only the alternatives of greenbacks, deposits, dollar securities—or buying U.S.-produced goods.
Japan does impose numerous restrictions on trade—though in recent years she has been reducing them. Those trade restrictions hurt Japan and they hurt us—by denying them and us mutually profitable trade. In Japan no less than in the U.S., concentrated producers exert a greater influence on government than widely diffused consumers and are able to persuade the government to fleece the consumer for the benefit of the producers.
However, we only increase the hurt to us—and also to them—by imposing additional restrictions in our turn. The wise course for us is precisely the opposite—to move unilaterally toward free trade. If they still choose to impose restrictions, that is too bad but at least we have not added insult to injury.
This is clearly the right course of action on economic grounds. But it is also the only course of action that is in keeping with our political position in the world. We are a great nation, the leader of the free world. Yet we squander our political power to appease the textile industry in the Carolinas! We should instead be setting a standard for the world by practicing the freedom of competition, of trade, and of enterprise that we preach.
Unfortunately, the above will not resonate with today's Republican Party, for the Republican Party has ceased to be a conservative party and has morphed into a nationalist populist party that has turned its back on the principles it once professed. Along with support for America's leadership role in the world and collective security, the Republican Party has also jettisoned fiscal responsibility and free trade.
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