By Pat Freibert
Ideally, trade tariffs would be unnecessary. But if the introduction of a new U.S. trade doctrine, including the levying of tariffs, does nothing more than bring negotiating countries to the table, it could help establish parameters for a truly “free trade” process. It has already induced two of our largest trading partners to indicate they are willing to reconsider making the North America Free Trade Agreement more fair to American exporters and American consumers.
Recently, President Trump walked back his original call for blanket tariffs on imported steel and aluminum, for a revised plan providing for negotiated exemptions for America’s allies. This new trade policy brought some of America’s key trading partners to the negotiating table very quickly, specifically Mexico and Canada, who won exemptions. The U.S. hopes continuing talks offer a possibility for better NAFTA terms for American manufacturers and consumers. The European Union is also showing a willingness to talk about fairer terms for the U.S. and for American consumers.
While the benefits of reducing trade barriers among countries are obvious, there is really no such thing as pure “free trade.” Strategic trade rules must be fair for everyone, and many economists believe the U.S. has increasingly not been accorded that fair treatment. The U.S. imposes fewer tariffs than almost any other country – half the average weighted tariffs imposed by China, one-third of those imposed by Mexico and one-quarter what India imposes. And in Europe, American-made autos are hit with a 10 percent tariff, four times higher than the tariff on European-made cars sold here.
Former lieutenant governor of New York Betsy McCaughey, now a political commentator, observes that under present international trading rules, American workers are being stung by “sucker trade,” not free trade.
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Stephen Moore, one of the economists advising President Trump on the recent tax-cut legislation, makes the point that many of our trading partners, especially China, are violating trade agreement rules “left and right and stealing American patents and intellectual property. And they have been doing so for years with impunity.” Moore also notes that China is estimated to be pirating more than a half trillion dollars’ worth of American technology, inventions, drugs, vaccines and computer software each year. He says that is theft, and it cannot stand. Moore says he does not know if he would endorse Trump’s trade doctrine, but that it’s worth considering and not dismissing out of hand.
While there is every indication that Americans and American businesses and exporters are being unfairly treated under existing trade agreements, no help has been forthcoming from the World Trade Organization, whose membership consists of 164 mostly poor and anti-American nations empowered to impose binding trade rules. The U.S. gets the same hostile treatment there that it does at the U.N.
While the Chinese and others won’t like the new U.S. trade doctrine, any tit-for-tat retaliation would undoubtedly hurt them more than the U.S. According to Moore, “If we lose access to their cheap goods and services, we pay more for clothes and toys and toothpaste at Wal-Mart. If they lose access to our markets, they crash into recession. Who loses more here?”
Unquestionably, unfettered trade across borders is good. Adam Smith taught the world that theory two and a half centuries ago. But every country must obey trade agreement rules for all sides to benefit. Why should those who violate the rules have unfettered access to the American market, the largest and most lucrative consumer market in the world? American trade policy needs to be designed to ensure that the interests of American companies and consumers are treated as fairly as those of our trading partners. ■