If one looks back at NAFTA (North American Free Trade Agreement), it was proposed by Ronald Reagan, who made the idea part of his 1980 presidential campaign. President George H.W. Bush negotiated it, and President Bill Clinton later slightly modified and amended it before signing it into law. It passed Congress with bipartisan support.
Free trade has been the trajectory of the world since the days of Adam Smith, and it advanced until the Great Depression. Some would argue that the abandonment of free trade and the Smoot-Hawley tariffs was a major contributing cause of the Great Depression.
After World War II, the liberalization of trade again advanced starting in 1947 when nations created the General Agreement on Tariffs and Trade (GATT) to reduce tariffs and provide a legal framework for trade. Other agreements followed. Liberalizing trade was the bipartisan policy of the United States up until the time of President Trump and the start of the current trade wars.
All of this time, while trade liberalization policies advanced under both Democrats and Republicans, Republicans were stronger advocates for free trade than were Democrats. I have been dismayed by Republicans' abandonment of free trade. Along with support for tariff reductions and free trade, Republicans have abandoned many of the beliefs they once held dear.
With the consequences of Trump's trade wars becoming more and more clear and Trump's popularity waning, will Republicans return to their decades-long support for free trade? Below are excerpts from an article recently appearing in The Wall Street Journal. It is by Phil Gramm and Donald Boudreaux. Phil Gramm is a former chairman of the Senate Banking Committee and is a nonresident senior fellow at the American Enterprise Institute. Mr. Boudreaux is a professor of economics at George Mason University and the Mercatus Center. They argue that Republicans will come to their senses and return to advocating for free trade. While I am pessimistic about the future of our nation and the world, and wonder if the old order can be restored, this article provides reason for optimism. Below are excerpts:
... When Mr. Trump asserted executive authority to impose the highest tariffs in 90 years, Republican congressmen, though skeptical, remained silent. If tariffs hurt Republicans in the November elections as much as they have hurt the economy, the midterms could end up igniting a Reagan revival on trade, shifting the trajectory of the party and the country. Donald Trump’s tariffs are hurting Americans. Real economic growth is slowing, consumer prices rising, and real wages stagnating. Now the Republican Party is set to pay for it.
No American president was more passionate about trade liberalization than Ronald Reagan. He understood that free and open markets allow “more productive use of our nation’s resources, more rapid innovation, and a higher standard of living,” as he said in 1985. “The freer the flow of world trade, the stronger the tides for human progress and peace among nations.”
Most Republicans in Congress favor free trade. ... The production disruptions and economic uncertainty that have come with Mr. Trump’s tariffs aren’t winning Americans over. ... congressional Republicans, because of intimidation or party loyalty, failed to oppose Mr. Trump’s tariffs ... Americans have reaped enormous gains from the fall of protectionist barriers. Per capita gross domestic product has risen 367% in real purchasing power since 1947.
.... The 2028 Republican primaries could be an opportunity for this Reagan trade revival to reassert control of the GOP. The right candidate could run on “affordability,” committing to overturn the Trump tariffs and differentiating himself from Trump protectionism and industrial policy.
To read the full article, follow this link.
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