The Political Economy of Trump’s Tariffs

By | 2018-04-05T07:18:16+00:00 April 4th, 2018|
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President Trump’s decision to impose tariffs on steel and aluminum imports has been roundly attacked from all sides. Tariffs are so beyond the pale that even the politically diametrical editorial boards of the New York Times and Wall Street Journal have condemned them. This unholy alliance of Left and Right merely demonstrates just how central the idea behind the tariffs is to Trump’s philosophical challenge to elite orthodoxy.

The very idea that Trump has a philosophy at all may strike many readers as odd. The president is notoriously transactional when it comes to policy, changing his mind on a host of issues with startling speed. Unlike past presidents like Ronald Reagan or even George W. Bush, Trump is notably unable or unwilling to comprehensively explain where he wants to take this country. These deficiencies in communication, however, do not mean that he lacks such a vision.

Pride and Dignity

Trump’s vision rests on an idea of community and nation that has fallen into disfavor among elites on both the Left and Right. Americans, in Trump’s view, are not simply individuals whose value is determined by market transactions. They are our fellow citizens, people to whom we have an obligation that is separate from their ability to persuade or compel the owners of capital to invest in their lives. When their dreams cannot be fulfilled or their lives are harmed because other Americans make decisions that directly or indirectly harm them, then we must act through our government to set things right.

This view carries with it a less materialistic and more spiritual view of what it means to be human. The American who can produce something of value produces far more than the value of the goods or services he produces. That person produces pride and dignity. Earning enough through one’s one efforts to support one’s life vision is the most basic source of pride. The great or talented may take pride in other things, such as the ability to best others in competition or build something outside themselves like a business or a work of art. But these more recognized sources of pride-inducing achievement ultimately rest on the most common and basic ability to produce enough of sustenance to support one’s self and one’s family.

Proud people also want to live in proud communities. They take care of their surroundings, both their personal homes and the collective they share. They want clean and safe streets, attractive buildings and open spaces, and even perhaps some expressions of communal pride and aspiration, such as those found in monuments, buildings, or common spaces. No upper-income suburbanite wants their child going to a school whose windows are broken or wants to shop in a place where shops are boarded up. The same holds true for everyone.

Winners and Losers

In Trump’s view, our political economy has been hurting millions of Americans for far too long. International trade agreements allow Americans who own capital—intellectual, physical, or monetary—to contract with foreigners to produce goods or services at vastly lower prices.

This means American factories close or move and the good paying jobs that come with those factories dry up. The owners of capital benefit enormously—that is what is behind the dramatic increase in incomes among the most educated Americans over the last 30 years. Americans as consumers benefit too from the cheaper goods and services this system creates. But millions of Americans are net losers—their losses as former producers far exceed their gains as consumers.

These Americans are also suffering spiritually. As they lose their jobs through no fault of their own, their sense of pride suffers. As too many of them lose their jobs all at once, their communities suffer too. They may find other work that pays less and make do, but their sense of being part of a common endeavor dims. As their communities decline into neglect and disrepair, their belief that America isn’t working for them grows.

Current intellectual orthodoxy treats these losses as the necessary, perhaps unfortunate, byproducts of an ever growing—dare one call it, progressive—society. The global increase of wealth is valued more by this orthodoxy than the loss of income and pride suffered by their fellow citizens. The dramatic increase in income and life opportunities foreigners obtain through this system is touted by elites as a great achievement. The loss of both by their fellow Americans is ignored.

“Makers” and “Takers”

This arises because elites on the Left and Right no longer believe that community or citizenship hold enough value to give rise to legitimate political claims. To even ask for protection—of jobs, of income, of the ability to pursue one’s dreams—is unacceptable. This is true especially on the Right, where to be called a “protectionist” is slander almost on par with being called a “racist.” Society progresses through the limitless increase in wealth: don’t you understand?

The Left and the Right disagree somewhat on how to address these losses, to be sure. Those on the right tend to ignore any request for redress as improper. If you ask for a subsidy to maintain your standard of living, say through food stamps or Medicaid expansion, many on the Right label you a “taker.” If you’re not building a business or going to college to improve yourself, you’re just not worth enough for us to take notice.

It’s no accident that the very people who flocked to Donald Trump turned their backs on the Romney-Ryan ticket.

The Left tends to fail by looking at the problem as merely material. To them, increased government subsidies and enforced minimum wage hikes solve the problem. But neither solution confers the pride that comes from a job, nor does either solution address the system that places these people under a continual competition that they simply cannot win. They are palliatives that ease the suffering of the body but ignore the suffering of the soul.

Spread the Wealth

Trump’s solutions—tariffs and immigration restriction—ring true to many Trump voters because they directly address what they perceive as the causes of their problem. Such direct action has the additional, perhaps the decisive, benefit of telling these voters that they matter. Just as one derives pride from living in a well-kept community, so one also derives pride from living in a country that exalts your values as its own. For many of these people, that more than any immediate or tangible increase in their income is what will “make America great again.”

Tariffs may not produce the desired results in increasing job numbers. Shrinking international trade may very well produce a shrinking global economy that causes Americans to lose jobs and become poorer. On the other hand, tariffs may simply be a precursor to a deal that spreads the gains from increasing wealth more evenly between foreign labor, capital, and American labor. That’s what the Reagan-era trade restrictions did. But in a very important sense, economics is not their point or even how their success solely should be measured.

So-called populist movements around the world are gaining strength because their voters no longer feel like valued members of their nations. They do not believe their worth should decline because the owners of capital say so, nor do they think their life dreams or values should be denigrated simply because the most educated have different visions.

Populists like Trump address this spiritual yearning and fulfill the deepest need every human has, to be valued and to belong to a group that values you. In this, and perhaps in this need alone, all men are truly created equal. Tariffs are simply an economic means to fulfill this spiritual need. Tariff opponents can only win if they first recognize this need and promise a more effective way to fulfill it.

But if Trump’s elite opponents do this, then he has already won, as they will have come to adopt the more holistic view of human nature that his challenge at its heart embodies.

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Photo credit:  NICHOLAS KAMM/AFP/Getty Images

About the Author:

Henry Olsen
Henry Olsen is a senior fellow at the Ethics and Public Policy Center, a think tank in Washington D.C. He is also an editor at UnHerd.com where he writes about populism and politics around the world. He is the co-author, with Dante Scala, of The Four Faces of the Republican Party (Palgrave, 2015) and is the author of The Working Class Republican: Ronald Reagan and the Return of Blue-Collar Conservatism (HarperCollins, 2017).