Clinton and Trump Wrong on Trade: The Terror of Tariffs and Trade Deals Alike

“Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.” -Adam Smith in The Wealth of Nations

Adam Smith, the father of modern economics has made it clear: like it or not the world as we know it from our own personal lives to the macro worldwide economy at its core rests on the principles of exchange and trade. Yet today we are faced with the troubling fact that the presumptive nominees of both the Republican and Democratic parties are openly hostile to such a key foundation of modern prosperity.

Here is where they go wrong.

First there is Trump. He has by far been the most vocal candidate in the 2016 election cycle when it has come to trade. He has boldly declared he supports the possibility of imposing a 45 percent tariff on Chinese imports and a 35 percent tariff on Mexican imports if the current trading conditions do not become more “fair,” as he will often put it. His “economic patriotism” has resounded deeply within many Americans who have been negatively affected by the national transition from a manufacturing=based to service industry-based economy.

It’s easy to see and decry the closed factories and lost jobs in the manufacturing sector. Yet what is not seen is how resources are now freed up and can be better allocated to future endeavors in enterprise. This is a classic case of the principle of What is Seen and What is Not Seen first noted by French classical liberal Frédéric Bastiat.

If you still are cautious of such analysis and not willing to change your outlook solely based on an abstract economic concept; look at a historical example of it in action. In the early 19^th century the Luddites were a group of British weavers and textile workers whose jobs were threatened by the new machinery of the Industrial Revolution. They began uprising and destroying new factories out of fear they would lose their good standards of living and high wages forever. Yet these fears were to be unfounded. Yes, the Industrial Revolution was not all sunshine and roses, it did end many jobs and ways of life people had long been accustomed to, yet in the long run it laid the ground work for the system that has brought us the into the modern age of prosperity and technology.

Yet if the Luddites had got their way, this crucial progress could have been suppressed for decades on end. Today, as our own technological economic revolution is occurring, Trump and his tariffs are nothing more than the revenge of the Luddites. They didn’t win then and we can’t let them win now.

But don’t get your hopes up for Clinton. Her positions are just as anti-free trade as Trump’s, just in a more slimy and trickster fashion — who would ever expect that from a Clinton!?

Hillary has been a major supporter of NAFTA (North American Free Trade Agreement) since it was passed into law under her husband’s presidency and the TTP (Trans-Pacific Partnership) while she was Secretary of State for the Obama administration. Only recently has she “evolved” her positions on these deals after growing pressure from Bernie Sanders’ assaults on her record, and if elected president I would bet my life that she goes back to being the Hillary of the past 20 years instead of staying the Hillary of the past 6 months.

What’s the problem with trade deals though? I mean don’t they expand trade which is good? Well not exactly. NAFTA itself is a trade agreement over 1,700 hundred pages long and the TPP is over 5,000 pages! What could be filling up so much space? Rules, regulations, stipulations, the list of bureaucratic nightmare lingo goes on and on. Multi-thousand page trade agreements aren’t the same thing as free trade. They simply benefit large corporations and leave small and medium sized businesses no better off than before. For example NAFTA banished many tariffs but kept the regulations in tact. Heavy regulation always creates expenses large corporations can pay for while leaving the little guys in the dust acting as a convenient competition suppresser big business loves.

Don’t loose hope though because there is a third option: libertarian trade policy. A policy in which international free trade flourishes without tariffs and minimal regulations that creates an even playing field for all businesses. Creating a system that allows the market to globally allocate goods and resources in order to keep striving for new heights of economic prosperity and efficiency for the future to come.