How Should Progressives Approach the Trade War?
Tariffs are no substitute for public investment and worker protections
Over the last several months, Donald Trump’s trade war with China has sent shockwaves through the global economy. Not only is it affecting the two superpowers, but U.S. allies like Japan and South Korea are also feeling the hurt. And it could very well end up pushing everyone into a recession.
It all started with the claim that China is stealing intellectual property from American companies. In reality, most of these “forced transfers” are agreements these companies must make with China in order to do business with them. A heavy-handed measure to be sure, but hardly illegal. Not that this stopped Donald Trump from slapping costly tariffs on Chinese goods — or China from responding in kind.
But for left-wingers, socialists and progressives this might seem like a silver lining to the Trump presidency. After all, we tend to view tariffs — and protectionism in general — in a positive light. And it’s easy to see why.
A tax on imports from foreign countries, tariffs can help protect domestic industries from overseas competition. They can also dissuade companies from shifting their operations to other countries since it means their products would incur tariffs in the U.S. consumer market. Thereby eating into their profits.
And so, if tariffs protect everyday Americans from having their jobs shipped overseas, then why shouldn’t progressives support Donald Trump’s trade war? Risky though it may be.
Progressives are certainly right to be suspicious about “free trade”. Despite what its advocates might say, free trade is not some indisputable force for good. At best, its results are mixed. Take the 1994 NAFTA agreement, for example. An agreement between America, Mexico and Canada, it reduced numerous trade barriers between the three countries. And to be fair, it did result in some benefits, like a modest increase in America’s GDP and a surge of Mexican manufacturing jobs.
However, most of these were low-wage jobs. And by tying Mexico to an export-led growth model, more than one million farmers lost their livelihoods. Meanwhile, in America, a majority of the gains went to multinational companies instead of workers.
In light of this example, it’s no wonder progressives aren’t singing the praises of free trade. But there are more than a few reasons why we shouldn’t support Trump’s trade war either.
For one, tariffs and trade barriers won’t be enough to keep good jobs in America. Free trade is not solely to blame for driving production overseas. As Robert A. Blecker, a professor of economics, notes in the Jacobin:
“Trade agreements are only one of the factors driving globalization; sharp reductions in the cost of transport (containerized cargo) and communications (information technology), as well as other nations’ economic development (China, etc.) are also important causes, and are unlikely to be rolled back.”
Unfortunately, the genie is already out of the bottle where globalization is concerned. And not even actually existing socialist states like Cuba can survive without a heavy reliance on international trade.
In today’s world, tariffs (by themselves) are too blunt a tool for protecting domestic jobs. That’s why Trump mostly uses them to extract concessions from other countries. He threatened Mexico with tariffs until they promised to tighten his borders. And his trade war looks like it has less to do with helping workers than keeping an ascendant China in check.
Progressives should not be fooled by this trojan horse. Instead, we should focus our energy on measures that actually improve people’s lives: public investment, strong unions and fair trade practices.
If Trump was actually serious about creating jobs for Americans, then he would’ve already poured billions into infrastructure, science and research. A tried and true method for boosting employment and living standards.
Instead, he ripped up a $2 trillion infrastructure deal with the Democrats because they dared to support the Mueller investigations. And he has proposed billion-dollar cuts to the Environmental Protection Agency and National Institutes of Health. All this alongside the biggest corporate tax cut in American history.
Trump’s blithe attitude towards labor rights also implies he couldn’t care less about American workers. Heck, his first Supreme Court nominee, Neil Gorsuch, cast the deciding vote to undermine public sector unions in June last year.
The ruling now prevents public sector unions from collecting fees from nonmembers who benefit from the deals they negotiate. Cut off from these vital resources, the strength of these unions is effectively sapped.
This should be cause for concern for any progressive. The evidence suggests that strong unions raise wages for less-skilled workers and lead to a greater equality of income. In fact, one of the reasons that Sweden, a country with no minimum wage laws, has seen such steady wage growth is due to their strong unions. By comparison, less than 10% of American workers belong to a union. And they have seen their real wages stagnate.
Additionally, the Trump administration has done what it can to shred worker protections. They have already reduced the number of safety inspectors for the Occupation Health and Safety Administration to an all-time low. And they are currently pushing for a law that would allow certain employers to fire workers who don’t share their religious views.
A deluge of tariffs doesn’t mean much for the workers who’ll see their rights and bargaining power disappear. And if they end up triggering a recession then it’ll be these workers losing their jobs.
Superficial appearances aside, Trump is no friend to American workers. His tariffs are nothing more than sleight of hand to make it look like he’s supporting their interests while he slides in the knife. And it reveals the limits of such a single-minded approach to trade.
All this being said, the worst thing about Trump’s trade war is that it’s hopelessly inward-looking.
Happy to fiddle while the rest of the world burns, Trump’s plan has always been to put “America First”. But the idea that the U.S. economy — if not the lives of ordinary citizens — hasn’t benefitted from reduced trade barriers is completely absurd. According to some estimates, the expansion of free trade has added over $2 trillion in GDP to America since 1950.
However, the Global South has not been so lucky.
As the 80s and 90s saw a rise in free trade, global institutions like the World Bank and IMF imposed devastating structural adjustment programs on India, Africa and Latin America. Countries were more or less forced to privatize their industries, slash public services and deregulate their economies.
These programs turned out to be one of the greatest causes of poverty in the 20th Century.
Nor are we seeing this same poverty disappear. According to Jason Hickel, a professor of anthropology at the London School of Economics, the number of people living in poverty (excluding China and East Asia) is actually increasing.
As Hickel has noted, China and East Asia were “some of the only places in the developing world not forcibly liberalized by the World Bank and the IMF.” And as a result, they were able to pursue state-led economic policies that helped them develop into the powerhouses they are today.
As progressives, we cannot afford to swallow the nationalistic tripe Donald Trump is pushing. We should embrace what economists like John Cavanagh call “New Internationalism”. A vision where:
“… the overarching goal is not to favor workers or communities in one country over another but rather to strengthen the role of all governments in protecting worker, community, and environmental improvement over narrow corporate interests.”
If there’s no putting a brake on globalization, then the catchword of the left should be fair trade instead of free trade. We will need to reform our institutions at a national and international level. In order to address the problems of mass poverty, the global system needs to prioritize the rights of workers and the environment over multinational companies.
Fortunately, there is no shortage of proposals on this front.
Jason Hickel has suggested giving countries in the global South a more proportionate share of the vote in the IMF and World Bank, as well as abolishing the veto power of the United States. Zhou Xiaochuan, the Bhao Forum for Asia’s vice chairman, has echoed these sentiments, calling for the World Trade Organisation to take a more multilateral approach. His appeal also stresses the need to help low-income countries benefit from the global trading system.
Closer to home, senators Bernie Sanders and Elizabeth Warren have both pushed for fairer trade. A long-time critic of free trade deals like NAFTA and the Trans-Pacific Partnership, Sanders has maintained that trade deals should reflect the interests of American and overseas workers instead.
Warren’s proposed trade plan represents a similar commitment. Like Sanders, she wants the negotiation of trade agreements to be a more transparent process. And she wants labor, consumer and environmental groups to have more influence over the process. Her eagerness to work with global institutions like the World Trade Organization to improve labor and environmental practices is also heartening— even if the punitive measures she suggests for non-market economies are worthy of censure.
All these people have an understanding of what needs to be done, a platform to spread their ideas, and in the case of Sanders and Warren, a genuine chance to reshape the political system. Unlike Trump, they do not root their criticisms of international trade in an “us vs. them” mentality. Instead, uniting the workers of the world remains the priority.
In the fight for an equitable, humane future, progressives must keep their eyes on the global horizon. The crude protectionism that Donald Trump offers does nothing to address the real issues facing American workers and should be rejected in favor of a different approach to trade. An approach that restrains the most destructive forces of capitalism.
Fair trade, in tandem with labor rights and public investment, still remains the best way to boost the economy and make life better for everybody.
