Heat from all sides.

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Free Trade Is Election's Bipartisan Target

Albert R. Hunt is a Bloomberg View columnist. He was the executive editor of Bloomberg News, before which he was a reporter, bureau chief and executive Washington editor at the Wall Street Journal.
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Any doubts that Donald Trump has had a huge (as he might say) influence on the Republican Party were dispelled this month when Senator Rob Portman came out against the Trans-Pacific Partnership.

There is no more respected member of what's called the Republican establishment: The Ohio lawmaker is a confidant of the Bush family, a runner-up vice-presidential pick in 2012 and a former U.S. trade representative.

QuickTake Free Trade Feud

But Portman is up for re-election, and Trump has changed the dynamics of the trade debate. The senator voted last year to give President Barack Obama fast-track negotiating authority on trade agreements, which was intended to pave the way for pushing the 12-nation Pacific Rim deal through Congress. But early this month he said he was opposed to the agreement.

Even Portman's friends acknowledge that his reasoning -- that the TPP doesn't stop currency manipulation -- is specious: The former top trade official in the administration of President George W. Bush knows that such matters aren't the province of trade deals. 

Republicans used to be the protectionist party. They authored the infamous Smoot-Hawley Tariff Act of 1930. After World War II, when the U.S. emerged as a global superpower, both parties essentially embraced the nation's role as a leader in the world's economic recovery. 

But a generation ago, Democrats, prodded by labor, began to change their stance because too many workers were being displaced by globalization. It was left to a couple of Democratic presidents, Bill Clinton and Obama, working with Republicans, to embrace and enact trade measures.

In this election season, however, Trump has set the agenda, and no presidential candidate is carrying a free-trade banner. The billionaire charges that America's "political hacks and diplomats" have been taken to the cleaners on trade deals that have cost millions of jobs,

He vows to undo Clinton's North American Free Trade Agreement, dump the proposed TPP and go after Mexico, Japan and China on trade. He has suggested a 35 percent tax on cars imported from Mexico. He also advocated a 45 percent tax on imports from China (he has denied that he made that proposal, but his words were captured on tape).

Such statements horrify traditional Republicans. "Hearing this demagogue talk about a 45 percent tariff on Chinese imports is arrogantly insane, a clear path to the results of the old Smoot-Hawley tariff of the thirties -- which made sure the depression lasted for a decade," said Bill Brock a former Republican National Committee chairman and U.S. trade representative.

To be sure, a number of economists and trade experts have dialed back their unbridled enthusiasm for trade deals. The advantages are well advertised, and largely correct, but the problems for U.S. workers are more severe than most free-trade advocates have acknowledged. This is especially true for those in manufacturing and low-skilled, older workers, many of whom are drawn to Trump.

Steve Weisman, a vice president of the Peterson Institute for International Economics, a research organization with a strong free-trade bent, recently published "The Great Tradeoff: Confronting Moral Conflicts in the Era of Globalization," which tackles this dilemma.

Weisman still supports pacts like the TPP but says these will be achievable -- politically and economically -- only if "we address the workers who are getting badly hurt by the intertwined forces of technology and trade."

Trade deals, he argues, need to include better and more creative training programs for displaced workers, as well as other notions such as wage insurance, which enables trade-affected workers to take lower-paying jobs without losing lots of money.

Yet this sort of rational, balanced discussion is absent in the presidential election, which is dominated by the Trump view. South Carolina is a good example. Once a protectionist hotbed after its old-line businesses were devastated by foreign imports, the state now is home to the plants of huge multinational corporations such as BMW and Michelin.

Still, surveys show that most South Carolinians favor a tax on imported goods to protect domestic jobs and that the state's Republicans, even more than Democrats, are anti-TPP.

Trump was the runaway winner of South Carolina's Republican primary on Saturday and trumpeted his protectionism in his victory speech. That's a message that will resonate in financial and trade capitals around the world.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Albert R. Hunt at ahunt1@bloomberg.net

To contact the editor responsible for this story:
Max Berley at mberley@bloomberg.net