John Hendrickson, The Center Square
“From this day forward, a new vision will govern our land. From this day forward, it’s going to be only America first. America first. Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families,” former President Donald J. Trump stated in his inaugural address. A large part of President Trump’s America First agenda was directed at trade policy and the need to both strengthen and reshore manufacturing. The nation celebrated Manufacturing Day in October. It is important that the nation continues to emphasize the importance of mining and manufacturing, not just for national security and a strong economy, but for the well-being of the middle class.
Trump’s America First approach in trade policy stunned both parties. He openly embraced the use of tariffs, encouraged “Buy American,” and often commented that the United States was not only at the losing end of trade deals, but often being taken advantage of as a result. The president frequently criticized other countries for prioritizing national interests while the United States was much more focused on the ideal of free trade, globalism.
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Trump changed trade agreements like the North America Free Trade Agreement, (NAFTA), and put tariffs on aluminum and steel. President Trump’s steel tariffs helped save and revitalize the steel industry. He was also the first American president to take full on China.
Manufacturing has always been vital to the nation’s economy. It was the “Arsenal of Democracy” that led to the defeat of Nazis Germany and the Empire of Japan during World War II. It was America’s manufacturing strength that helped make the 20th Century the “American Century.” Likewise, it was manufacturing that helped create a strong middle-class. This all changed after World War II, when the country embraced globalization. Both political parties became religious in their embrace of globalization, as they worshiped the golden altars of free markets or free trade.
Due to the globalization process and the numerous free-trade agreements with China, along with the granting of China the most favoured nation status, manufacturing declined in America, particularly in the Midwest. Ambassador Robert Lighthizer, who served as President Trump’s United States Trade Representative (USTR), argues that “trade accords during this time, such as the NAFTA, zeroed out tariffs on imports from low-wage countries, worsening manufacturing job losses.”
It had a devastating impact on communities all across America, particularly in the Midwest. Ambassador Lighthizer stated that America lost 5,000,000 manufacturing jobs. “That, in turn, devastated towns and contributed to the breakdown of families, an opioid epidemic and despair,” Ambassador Lighthizer wrote. The “blue-collar” workers became the “forgotten men” and often they were told by the political elite that they should either abandon their communities and relocate or learn another skill such as computer programming. Since 2001, the nation “has rung up over $12 trillion in accumulated global deficits.”
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This “creative destruction” had consequences. While consumers could get better products at a lower price, losing manufacturing jobs caused lower wages, increased dependence on social services programs and economic decline for many communities. Between 2001-2018, 3.7 million American jobs were lost to China.
“For many decades, we’ve enriched foreign industry at the expense of American industry … One by one, the factories shuttered and left our shores, with not even a thought about the millions and millions of American workers that were left behind. The wealth of our middle class has been ripped from their homes and then redistributed all across the world,” President Trump noted.
COVID-19’s pandemic is an example of just how dependent China has made the country. It also shows just how dependent other nations are for basic necessities like medicines, medical supplies, and medicine. This pandemic also created many supply-chain problems. It has made the United States dangerously dependent on other nations for its essential goods, even hostile countries like China. Even materials that are critical to national security or defense can be affected by this dependence. At the moment, there is a shortage on semiconductors.
“Why are semiconductors so important? Because computer chips are the ‘brains’ of not just computers, cars, and medical devices, but also the weapons systems that support America’s military. Being so dependent on imported computer chips leaves America’s national security vulnerable to the whims of the global market,” wrote Michael Stumo, CEO of the Coalition for a Prosperous America.
“Is not the case now conclusive that we made a historic mistake when we outsourced our economic independence to rely for vital necessities upon nations that have never had America’s best interests at heart,” asked columnist Patrick J. Buchanan?
Currently, the United States is still running large trade deficits and President Joe Biden is getting pressure to reverse some of President Trump’s trade policies, especially tariffs. At this point, the Biden Administration is leaving China’s tariffs intact and keeping steel and aluminum prices. However, both parties are under pressure to end tariffs and join Trans-Pacific Partnership, which Trump has stopped America from joining.
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Critics of President Trump’s trade policy argue that it not only punishes America, but that he started a trade war. Free-trade and globalization supporters fail to recognize that China and other countries were already benefiting from the United States. China has made use of the United States, whether it’s through currency manipulation or flooding markets with low quality products. China has also been actively engaged in power politics through building its military and rattling the sabers. China wants to become the dominant power.
“International trade has largely failed America over the past three decades,” Ambassador Lighthizer wrote in The Economist. Historically, the Republican Party, with its roots from Alexander Hamilton, saw tariffs as a policy tool to defend America’s home-market and protect workers. Trump is correct about trade. While it may take some time for trade to be balanced, in the end it will help strengthen our economy as well as create a strong middle-class.
John Hendrickson serves as Policy Director at the Tax Education Foundation of Iowa.
This article was Syndicated by permission of The Center Square.