The Tariff King Cometh

Trump delivers a long-awaited body blow to an unfair global economic order. We put it in historical context.

It was the spring of 1991, and I was in the upstairs bedroom of an apartment a few miles south of Indiana University, where I was enrolled. The little TV set in my bedroom was tuned to C-SPAN and the U.S. House was debating what was then called the Mexican Free Trade Agreement and would later be broadened to all of North America and simply be called NAFTA.

I suppose, before I make myself sound too studious, I should admit there’s a good chance a hangover might have been involved in my lounging and watching TV. Or, at the very least this trade debate was distracting me from studying for something. But I really got into it.

The Republicans were all for the agreement, celebrating this expansion of free enterprise. The Democrats were against it, saying it would encourage companies to relocate to Mexico in search of cheaper labor and laxer environmental regulation, and then ship back to the United States—where they would undercut, and eventually drive out of business, American competitors.

I grew up a Reagan kid in the 1980s and was still a mostly conventional conservative at this point in my life. There was no major issue where I broke with conservative orthodoxy. Until this day. I had never really thought about trade issues before. But by the time the debate was over, my strong sense was “They’re right, we’re wrong.”

Little did I know, that lazy afternoon in Bloomington, would usher in what was turned into a lifelong political antagonism with both the Republican Party in general and most of mainstream conservatism.

Free trade became the issue I usually broke company on with conservatives with whom I otherwise agreed with on social and cultural issues, taxes, and spending (Ben Shapiro being a good modern-day example). Free trade became the issue I broke company with libertarians, whom I often agreed with on anti-war policy (Tom Woods being a good modern-day example).

So, when Donald Trump rode to the Republican nomination in 2016, and later the presidency, vowing tariffs I was not only on board—I knew full well the schism he was unearthing within both the Republican Party and the conservative pundit class.

I knew the schism because I had literally lived it, right from the beginning of the explosion of free trade agreements in the early 1990s, starting with NAFTA and continuing on through the founding of the World Trade Organization (WTO). I knew it because it was what fueled Pat Buchanan’s populist challenges to the Republican Establishment, challenges which had yours truly trudging through Bloomington a winter’s day trying to get signatures to put him on the primary ballot.

I had become convinced that, at least on economics, trade was more than just one issue among many. It was the issue as far as creating a prosperous economy for everyone. While taxes and spending are important, they operate on the margins. Maybe you save some money on your tax return. Or, maybe you get a boost in your government benefits. But the fundamental equation doesn’t really change. Trade policy, on the other hand, shapes the entire contours of an economy.

By shifting our economy to free trade—globalization—the government set up a system where certain sectors of the economy would reap great benefits. Finance and technology—things that could easily be transferred across borders—was one example. Law and accounting, the areas that do the paperwork, were another. Within these worlds, prosperity reigned like never before.

But in other parts of America, it was a different story. Industries were hallowed out. Jobs that once provided a living wage to everyone from high school graduates to legal immigrants like my grandfather from Ireland, were gone. The only way out was mountains of student debt or the military—the free trade globalists always had another war for someone else to fight, and now that a lot of people with no other alternatives to recruit from.

Well, actually there was another alternative. It was called just turning to alcohol, painkillers, and other addictions to drown the hopelessness. Hillbilly Elegy, the book and film about the life of J.D. Vance, is more than an interesting autobiography about a future Vice-President. It’s the real-life portrait of an American tragedy.

The free trade era was a death sentence for industries and communities across America. And the promised rewards never came. Yes, the stock market kept soaring. The favored sectors of the economy kept booming like never before. But the middle class was being hollowed out. The gap between rich and poor was growing.

Moreover, the victims were not confined to the United States. In the early 1990s, outlets like the Wall Street Journal, assured us that as companies moved south, those countries would become more prosperous, and there would be less illegal immigration. How’s that worked out? It turns out that a poor person in Nicaragua that gets a job paying the equivalent of pennies is still poor—now they’re just working long hours to be poor. And no less desperate.

We never got a chance to vote on this in a presidential election. Democrats, following the lead of Bill Clinton, abandoned their previous opposition to free trade. Republicans remained mired in their own orthodoxies, even as industries vital to national security were lost.

The political Establishment, firmly wired into the favored sectors of the economy, were determined that any critics of globalization would not get out of the presidential primaries. The donor class and the favored television networks of both parties were firmly in the tank for free trade.

There was only one way a tariff-supporting candidate would break through. They would have to already be one of the most famous people in the world, have a well-established track record as an international businessman, and a sheer force of personality that could push through all of the forces outlined above.

Trump already renegotiated NAFTA and addressed some of the worst abuses of the free trade era in his first term. On April 2, he took the next step and delivered a massive blow to the free trade structure of the global economy. Here’s a short list of the tariffs that were announced—including how much in tariffs we are charged for exporting into those countries.

Over three decades after watching that C-SPAN debate in my college apartment, it’s raining tariffs. I never thought I’d see it. But it’s a beautiful thing.

The Markets React

You’ve probably heard that the stock market didn’t take the news well. Decades of investing in companies who have profited by the exploitation of cheap labor came home to roost.

But the market is resilient. I reached out to a friend who successfully does his own investing and asked him his reaction. Like most reasonable people, he’s prepared to ride it out for a few months and fully expects that the market will adjust to the new reality. Different types of companies will prosper in this new order. Some of the tariffs will be negotiated downward in return for fairer trade terms abroad.

Or, as my friend put it, the market consistently goes up over time because it’s driven by human behavior—and human beings adapt to changed circumstances. Trump has simply changed the circumstances to something a little fairer for the increasing numbers who have been left behind in globalization.

A New Era

Trump is far from a newbie to the trade issue. He’s talked about it for his entire career in the public eye. There’s an interview circulating that he did as far back as 1988, with Oprah Winfrey, talking about how we were getting ripped off on trade. He’s been attuned to this issue, in all of its complexities and nuances for his entire life.

Trump is restructuring the entire way America does business, and whatever birth pangs we go through, it has to happen. It’s simply not fair or right for the economy to be hotwired so a group of industries that seems to get increasingly smaller with each passing day can get extremely rich, while businesses rooted in their communities have to put up “Closed” signs. It’s not right that the factory worker in Evansville gets laid off and the seamstress in Mexico gets terrible wages, all so a comparatively smaller group of people can see their wealth exponentially explode.

This type of economic pivot is much more than just another policy decision. It’s impacting trillions of dollars in a way that will ultimately benefit ordinary people.

Trump was born for this moment. He’s prepared for it. Stay the course. And if you are tuned into the media noise, remember this—the people with the most to lose are the ones who have the biggest platforms with which to complain. The far more numerous victims have only Trump to be their voice.

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I wrote a novel back in 2003 that was set in a fictional Irish Catholic neighborhood in postwar Boston. It’s still online at Amazon, in both print and electronic formats. The novel celebrates Catholic teaching, old-school populist politics (in an era when the Democratic Party was home to my kind of voter), the Boston Red Sox and Notre Dame football. In the worlds of faith, sports, and politics, it captures what I believe.

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