GOP Needs to Leave Trump Behind on Trade

His tariffs harmed American consumers. The party of freedom should stand for free exchange.

By Jeb Hensarling. Mr. Hensarling is a former chairman of the House Financial Services Committee (2013-19), an economics fellow at the Cato Institute and an advisor to Americans for Prosperity. Excerpts:

"Numerous studies have shown that almost all the costs of tariffs initiated under the Trump administration were paid by American consumers and businesses. To take one example, the median price of a washing machine increased by $86 within months after President Trump imposed tariffs on them. According to the American Action Forum, Mr. Trump’s tariffs combined have increased consumer costs by approximately $51 billion a year."

"In most respects the Trump tariffs on Chinese goods failed. The trade deficit, which remains a misleading statistic, actually increased during the Trump administration. Any decrease in the U.S. trade deficit with China was offset by increases in deficits with other countries. Further, two can play the tariff game. Ask the Midwestern farmers who suffered from China’s retaliatory tariffs and had to be bailed out with $12 billion in subsidies from the U.S. Treasury."

"Manufacturing employment as a percentage of the workforce has decreased dramatically since 1980. While some communities have struggled with this transition, these jobs have largely been replaced with service ones. That doesn’t mean low-pay employment like burger flipping, but rather jobs in fields such as healthcare, tech, communications and finance. The U.S. is the world’s No. 1 exporter of services and runs a surplus in services trade.

Foreign competition isn’t killing U.S. manufacturing jobs. Productivity is the culprit. According to the American Iron and Steel Institute, it took 10.1 hours to produce a ton of steel in 1980; today it takes only 1.5 hours. While there are fewer manufacturing jobs than there were 40 years ago, the ones that remain pay better because of productivity gains. According to the Center for Strategic and International Studies, the median income of blue-collar workers in manufacturing increased 50% in inflation-adjusted terms between 1960 and 2019.

The reality is that tariffs harm most manufacturing jobs. Roughly 60% of all goods imported are intermediary goods or materials used for domestic manufacturing"

"Republicans love to talk about “draining the swamp” in Washington. But the tariffs imposed by the Trump administration empowered hundreds of bureaucrats at the Commerce Department and the Office of the U.S. Trade Representative to grant waivers under what can at best be described as an opaque process with discretionary standards. As one company officer of a small pipeline manufacturer told National Public Radio in 2019, applying for a waiver “is a nightmare, like dealing with a lawyer and the IRS at the same time.” A schedule of tariffs doesn’t drain the swamp. It fills it with well-connected lawyers and lobbyists who know how to work the system."