If Donald Trump’s sister is right that he “has no principles,” he does at least have a few enduring instincts. Perhaps the most persistent is the president’s conviction that American greatness is threatened by voluntary economic exchange, the most powerful engine of peace and prosperity in human history. Each of us has a fundamental right …
If Donald Trump’s sister is right that he “has no principles,” he does at least have a few enduring instincts. Perhaps the most persistent is the president’s conviction that American greatness is threatened by voluntary economic exchange, the most powerful engine of peace and prosperity in human history.
Each of us has a fundamental right to the fruits of our labor, which includes the right to exchange the money we earn for products and services. When governments respect that right, mutually beneficial transactions replace zero-sum interactions that forcibly transfer resources from losers to winners. The value of those voluntary transactions does not depend on where buyers and sellers happen to be located.
Trump’s rejection of those principles pervades the second-term agenda he unveiled this week. He promises not only to “create 10 million new jobs in 10 months”—which itself betrays a basic misunderstanding of the president’s powers and the way a market economy works—but also to “keep jobs in America” through “Made in America” tax credits and “fair trade deals that protect American jobs.”
Even keeping jobs in America is not enough to satisfy Trump, who also wants to dictate who can fill those jobs. He would use immigration law to “prohibit American companies from replacing United States citizens with lower-cost foreign workers.”
Notwithstanding his vociferous rejection of the “socialism” he ascribes to the Democrats, Trump believes the government must manipulate the economy, which means overriding the choices Americans otherwise would make, to ensure his preferred outcomes, down to details as mundane as the location of air conditioner and washing machine factories. In his mind, trade is not a right to be respected but a process to be managed by politicians.
Ignoring the principle of comparative advantage as well as the self-evident benefits of transactions that both parties freely choose, Trump believes Americans should not be using oil, pharmaceuticals, or medical supplies produced in other countries. To “end our reliance on China” and “bring back 1 million manufacturing jobs,” he would provide tax benefits to companies that “bring back jobs from China” and deny federal contracts to businesses that “outsource to China.”
Trump’s obsession with stopping Americans from buying Chinese goods is at odds not only with his party’s former support of free trade but also with its avowed resistance to tax increases. Taking into account retaliatory tariffs as well as the taxes Trump imposed directly, his trade war with China is costing American consumers an estimated $57 billion a year, on top of the costs borne by U.S. farmers and manufacturers caught in the crossfire.
In contrast with his positions on, say, abortion or gun rights, Trump’s beef against free trade is longstanding and seemingly sincere. No matter what pointy-headed economists say, he knows in his gut that money spent on foreign goods is wasted, that immiserating autarky is the key to American greatness, and that something nefarious is going on whenever imports from a particular country happen to exceed exports.
“You only have to look at our trade deficit to see that we are being taken to the cleaners by our trading partners,” Trump wrote two decades ago in a book that likened peaceful economic exchange to warfare. “If we didn’t trade,” he averred two years ago, “we’d save a hell of a lot of money.”
When Trump ran for president in 2016, the Republican platform likewise bemoaned “massive trade deficits,” even while paying lip service to “open markets.” This year the party decided to forgo a platform, saying it stands for whatever Trump has in mind.
Whatever that is, we can be pretty sure it will ignore a wise warning from the 2016 GOP platform. “We are the party of a growing economy that gives everyone a chance in life, an opportunity to learn, work, and realize the prosperity freedom makes possible,” the Republicans said then. “Government cannot create prosperity, though government can limit or destroy it.”