Is there a Silver Lining to Trump’s Protectionism?

This is Easter weekend, which means the world’s Christians will be focusing on the miracle of Jesus’ resurrection.

Today’s column, however, is going to focus on a different kind of miracle. Trump’s blundering protectionism, according to new polling data, has convinced leftists to support free markets.

To be sure, the fact that more than 40 percent of leftists “strongly approve” of free trade does not mean that they suddenly are fans of Milton Friedman and Adam Smith.

I’m sure it’s mostly just reflexive opposition to Trump.

But this got me thinking about how there may be a silver lining to Trump’s protectionism. And that was one of the issues I wrote about in a column earlier this week for the U.K.-based Telegraph.

Here are some excerpts, starting with an explanation of how Hoover’s awful protectionism eventually led to more free trade.

In 1930, Herbert Hoover signed the Smoot-Hawley Tariff Act. Combined with many other policy mistakes, that protectionist law led to a dramatic contraction in global trade and contributed to America’s decade-long Great Depression. That’s the bad news. The good news is that Hoover’s protectionism was a learning experience for American policy-makers, producing a mostly bipartisan consensus in favour of trade liberalisation in the decades after the Second World War. Under both Republican and Democratic administrations, there were ongoing efforts for multilateral trade liberalisation (GATT, WTO) as well as bilateral and plurilateral free-trade agreements. As a result, trade barriers dramatically declined in the post-Second World War era and global prosperity dramatically increased.

I then speculated that Trump’s awful protectionism will ultimately have the same effect, by making people more favorable to trade.

Donald Trump, like Hoover, is reigniting support for free trade. …Notwithstanding friendly ties to anti-trade labour unions, every single Democrat in the US Senate voted to reverse Trump’s trade taxes on Canada. …people are witnessing in real time how protectionism does economic damage. They’ve seen stock markets decline in haphazard fashion and they’ve seen interest rates rise in bond markets. …For all intents and purposes, Trump is conducting a protectionist experiment and America’s economy is a test subject. It is all but inevitable that this experiment will fail… As such, it is all but certain that support for free trade, already at high levels in the United States, will climb even further. …The bottom line is that Trump’s protectionism is bad news for the global economy, but his mistake hopefully will mark the beginning of a resurgence in pro-trade sentiment. He’s giving the world lemons, but maybe other leaders can make lemonade.

By the way, I’m not being too much of a Pollyanna.

I close my column by warning that the United States will not be well-positioned to benefit from a global shift to free trade.

Indeed, I wrote that there’s a possibility that China will be a big winner, which is unfortunate given that nation’s use of industrial policy and cronyism.

Though perhaps Trump will even convince the Chinese to move in the direction of genuine free trade. Heck, the Chinese Embassy even shared a video of Ronald Reagan arguing against protectionism. Not something I ever thought I would see!

P.S. If Trump winds up supporting higher tax rates, as some of us fear, would that result in Bernie Sanders and AOC voting for lower tax rates? A second miracle!

P.P.S. If the Chinese Embassy wants more of Reagan’s pro-trade videos, I have three more they can use (here, here, and here).

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Image credit: Gage Skidmore | CC BY-SA 2.0.