Business Review Board / March 24, 2016

Republicans Against Free Trade?

Take a trip to Walmart and you’ll know why.

We recently noted this truth about raising tariffs: Theoretically, higher prices for foreign goods will increase demand for U.S. products and, consequently, create jobs here at home. Nice theory, but reality doesn’t support it. Instead, protective tariffs have historically cost American jobs while inciting retaliatory tariffs by foreign powers and increasing consumer prices.“ The Republican platform in 2012 similarly made the case for free trade: "It means more American jobs, higher wages, and a better standard of living. Every $1 billion in additional U.S. exports means another 5,000 jobs here at home. The Free Trade Agreements negotiated with friendly democracies since President Reagan’s trailblazing pact with Israel in 1985 facilitated the creation of nearly ten million jobs supported by our exports.”

So then why have so many Republican voters become protectionists? A recent Gallup poll found that more Democrats and independents (63%) view free trade favorably than Republicans (50%), the latter of which is down from 57% in 2002.

Investor’s Business Daily ponders the reasons: “You could blame this as a sign of reflexive GOP hostility to Obama, who recently was pushing TPP. But Obama was silent on trade for most of his presidency. And while Donald Trump is getting the benefit of — and adding fuel to — this anti-trade fever, he didn’t cause it, either. A YouGov poll taken in early June 2015 found that just 40% of Republicans said free trade has been good for the U.S., compared with 51% of Democrats. More curious still is the fact that Democratic Party leaders have consistently attacked free trade deals, mainly because unions saw them as a threat. What’s most depressing is the fact that the benefits of free trade are one of the few things that just about every economist — liberal and conservative — agrees on.”

A trip to Walmart illustrates how most Main Street Americans feel about trade, however, not the latest white paper from a Beltway economist. Perusing the shelves of the nation’s largest retailer, it seems one is barely able to find anything made in America. Compounded by regular headlines about factories closing or jobs moving overseas, and the average American just gets the sense that everything Donald Trump says about trade is right. It’s not, but perception is reality. Until the real reason jobs and goods are headed overseas is reduced — taxes and regulations being too high — free trade is going to face pretty stout opposition.

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