Will Trump’s trade and tariff policies make America great again?

James Bradshaw

December 16, 2024 6 Reactions

When he took office in 2017, he looked for a US Trade Representative who would implement his general vision and found a vastly experienced trade negotiator with the skills and intellect to chart a new way forward: Robert Emmet Lighthizer.

Over the next four years, Lighthizer was centrally involved in Trump’s various trade battles. Regardless of whether or not he serves in Trump’s team this time around, Lighthizer’s thinking will influence Trump’s approach, and his 2023 book, ‘No Trade is Free: Changing Course, Taking on China, and Helping America’s Workers,’ offers a brilliant insight into Trumpworld trade policy.

Though the intricate technicalities of his chosen profession may be suggestive of a dry personality, his writing style is surprising for its fluency and liveliness.

The story he tells about American de-industrialisation helps to explain much about recent American politics. 

Imports into America have greatly exceeded exports for decades - Lighthizer writes that America has accumulated $11 trillion in trade deficits since 2000.

What this means in practical terms is outlined early on. Though America invented the personal computer, the vast majority of computers are now imported, and America has also lost its status as a heavyweight in semiconductor production and the production of rare earth elements.

Industries like car manufacturing and shipbuilding have declined significantly; America’s shipyards now produce fewer than 10 ships each year, compared to the more than 1,000 ships built in China annually.

Lighthizer adds that China makes more steel than twice the combined steel production capacity of America, the EU, Japan and Brazil.

President-elect Trump’s stated plans to apply tariffs on Chinese goods after he takes office suggests that major disputes lie ahead in the relationship between the two superpowers.

Much of the book is dedicated to Lighthizer’s explanation of how China operates as a mercantilist power which boosts its own industries while hindering US access to Chinese markets, while also engaging in espionage, industrial theft, forced technology practices and other harmful practices.

Yet Lighthizer (and Trump) would have a major concern with the current trade imbalance with China even if it was not a criminal dictatorship or America’s largest rival.

“[E]vidence and experience have shown us that free trade is a unicorn: a figment of the Anglo-American imagination. No one really believes in it outside of countries in the Anglo-American world, and no one practices it…It is a theory that never worked anywhere. All the great economies were built behind a wall of protection, and often with government money,” Lighthizer argues, before adding that what makes a country great is not consumption, but production.

This means that the preservation of productive industry is vital in a national context where more than half of American adults have no college degree and where their employment opportunities in sectors like tech are therefore limited.

While many economists would dispute Lighthizer’s criticisms of free trade - and the recent record of dramatically expanded prosperity worldwide is not afforded any space in this almost exclusively American-focused argument - there are compelling points throughout.

In the context of China’s recent behaviour and that of its junior partner in Ukraine, Chinese industrial strength is a threat, and all the more so given the decline of America’s industry. The difficulties which the West is having in effectively supplying Ukraine demonstrates the cost of allowing industrial muscle to atrophy over several decades.

The decline of the American Rust Belt, like the decline of northern Britain, owes much to elitist focus on political, economic and cultural centres elsewhere. For too long, these post-industrial areas were left behind, as Sir Paul Collier wrote recently, and the political backlash helps explain much of what has happened in recent years, including the rise of Trumpism.

There is something much deeper underpinning Lighthizer’s worldview.

One of the key factors which made him adopt a far more critical position on international trade compared to other successful figures in the legal or corporate worlds was the impact of de-industrialisation on Lighthizer’s hometown of Ashtabula, Ohio.

The story he tells of declining life prospects for many in a small Ohio town closely resembles the personal reflections of Robert Putnam in his memorable 2016 bestseller, ‘Our Kids: The American Dream in Crisis.’ Members of the cognitive and educational elite like Lighthizer and Putnam continue to prosper, but the economic upward mobility which existed in mid-20th century America is nowhere near as evident.

This is an economic problem but also a cultural one.

Lighthizer describes the Catholic parishes and the Catholic education which forged him in the 1950s and 1960s. Surveying Ashtabula today, he describes how the parishes have amalgamated into one, and notes that the Catholic school he went to has since closed.

This is not incidental to his argument. Taking issue with the standard approach of free market economists who prioritise economic efficiency - even at the cost of disruption caused to domestic industries - Lighthizer emphasises that other considerations such as the need for dignity in work must be taken into account.

Referencing Pope Leo XIII and the insightful Oren Cass among others, Lighthizer contends that “[d]oing honest work for a decent wage instils feelings of self-worth that come from being needed and contributing to society. Stable remunerative employment reinforces good habits and discourages bad ones. That makes human beings into better spouses, parents, neighbours and citizens.”

Take away these kinds of jobs, he suggests, and you end up with the sort of social problems which ail so many post-industrial regions in America and elsewhere.

When negotiating the United States-Mexico-Canada Agreement (USMCA) deal to replace NAFTA, Lighthizer ensured that the new agreement would contain stronger labour rights for Mexican workers along with a Labor Value Content requiring that more workers be paid at least $16 per hour.

Of course, a self-interested goal here was to ensure American businesses could not be badly undercut on wages, but the Lighthizer/Trump approach also meant that more Mexican workers could earn a better wage.

Among the policy steps which Lighthizer recommends in future are the introduction of stricter labour and environmental standards for those selling goods into the American market, along with tougher enforcement of existing trade rules and increased US investment in critical areas.

Much of this has - as a result of steps taken by both Trump and Biden - become part of a new American economic policy consensus. Gone are the days of free trade agreements being a key goal of the Clinton and Bush administrations.

Is this a positive development? For many outside the US who counted on America as the leading champion of global trade, it clearly is not.

An air of nostalgia permeates this book’s pages, as when Lighthizer describes how an economically protectionist America rose dramatically in the late 19th and early 20th centuries to become the world’s greatest economy.

Yet many of America’s trade rivals whose imports so concern Lighthizer were desperately poor in that era. Their rise has been good for their people, and for humanity writ large.

Although measures to increase pay levels and labour standards in the developing world could be morally useful, differences in living standards (and therefore salaries) will persist and these should not be used to justify measures blocking trade and keeping the global poor in their lowly position.

As with some opposition to the breakdown of social cohesion caused by mass immigration, there is always a risk that those pining for America’s lost industry are really grieving the loss of something else: the post-World War II America characterised by close-knit communities, intact families and packed churches. Ultimately, tariffs and trade wars will not bring this world back.

While protectionism and state support are necessary in some areas (particularly relating to defence), a world where countries trade less with one another will ultimately be one which is poorer overall.

Robert Lighthizer’s arguments should be taken very seriously by trade advocates and everyone else, as his disciples will be at the driving wheel of the American economy for many years to come.

The true test of Lighthizer’s vision will be the extent to which he and others focus on the human dimension: whether they earnestly promote the dignity of the worker wherever in the world he toils, or whether protection becomes a euphemism for a narrow-minded selfishness.

A new day is coming; indeed, it has already arrived.  

What’s your take on Trump’s proposed tariffs?    

James Bradshaw writes from Ireland on topics including history, culture, film and literature.

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