The “break” in US trade policy came under Trump and Biden, not in the 1990s.

Recently, a spate of news stories has attempted to predict future US trade policy under a potential second Donald Trump administration. Robert Lighthizer, the former US Trade Representative under Trump, remains close to the former president and has emerged as a reference guide on trade policy. This is buttressed in his book, “No Trade is Free,” and numerous interviews including a podcast where he is interviewed by a sympathetic Jack Goldsmith of AEI. There is much to take issue with, however, in the Trump/Lighthizer assertions regarding the economics of trade policy—namely, the claim that trade policy can control a nation’s trade balance, and that other nations, rather than US consumers and intermediate goods, pay for US tariffs, despite overwhelming evidence to the contrary.

Here the goal is to challenge Lighthizer’s reading and interpretation of US trade policy since World War II (which economist Gordon Hanson described as “jaw-dropping” in his review of Lighthizer’s book).

Central to Lighthizer’s historical account is the claim that US trade policy changed dramatically and disastrously in the 1990s. In truth, a close look at the postwar record of US trade policy does not bear this out.

To review, back in 1934, the Roosevelt administration backed the idea of a series of reciprocal trade agreements from which the US would lower its trade barriers (almost entirely tariffs at the time) if other nations reciprocated. After World War II, the Truman administration carried on this principle as it led efforts to create the multilateral trade regime under the General Agreement on Trade and Tariffs (GATT)—at the war’s end, tariffs around the world averaged over 40 percent. Then, the Eisenhower administration represented a historic shift in internal economic policy. Eisenhower reversed the Republican Party’s held protectionist trade policy and moved forward with GATT negotiations to progressively lower tariffs on a reciprocal basis. Presidents Kennedy, Johnson, Nixon, and Ford continued this trajectory, and by the mid-1970s, average world tariffs were about 10 percent (though they were higher in developing countries). Beginning under President Carter but gathering force under Presidents Reagan, H.W. Bush, and Clinton, trade negotiations moved “inside the borders” to deal with so-called non-tariff barriers related to domestic regulations and the service industries.

For Mr. Lighthizer, at this point, trade negotiations represented a wrong turn, when negotiators “started reducing other things and doing other crazy stuff.” Jumping ahead to the alleged “break” in the 1990s, Lighthizer places special blame on Bill Clinton, who surrounded himself with “elitist, know it all[s]” who ignored warnings from individuals such as Mr. Lighthizer.

Along the way, Lighthizer attempts to recruit Ronald Reagan to the Trump MAGA phalanx, arguing that Reagan was not a free trade economist, but an “economic nationalist.” Certainly, the Reagan administration lapsed at times from free trade principles—such as voluntary import and export restrictions with Japan and South Korea—President Reagan and his trade team also believed in strong economic internationalism. They took the lead in diplomacy, leading to the most productive multilateral in the postwar era—the Uruguay Round, which resulted in major new commitments on services, investment, and intellectual property protection—all areas where US companies and workers stood to gain substantially—and laid the groundwork for the WTO. In addition, the Reagan administration pushed ahead with negotiations for the Canada-US Free Trade Agreement.

President H.W. Bush continued with the multilateral negotiations and saw the expansion of agreements with Canada and Mexico via NAFTA. Thus, while not initiating these negotiations, President Clinton, after equivocating on NAFTA, led the successful conclusion of NAFTA and the Uruguay Round. To conclude the historical narrative, President W. Bush negotiated a series of smaller bilateral and sub-regional agreements, which President Obama, despite the 2008-09 financial crisis, moved forward with the 12-member Transpacific Partnership Agreement (TPP). In sum, in the postwar world, US presidents from both parties—despite shifting political and economic winds—held that a reciprocal lowering of trade barriers, at and inside the border, was in the US’s financial and strategic interest.

The real “break” came with the Trump and Biden administrations. Famously, Trump pulled out of the TPP negotiations, attacked the World Trade Organization (falsely) as always deciding against the US, proudly proclaimed himself a “tariff man” and levied taxes on steel and aluminum, as well as other duties imposed on China. Biden continued Trump’s tariffs and, bowing to the progressive wing of the Democratic party, has taken additional free trade agreements off the table and retreated from defending vital digital trade rules. His US Trade Representative Katherine Tai has repeatedly attacked prior administrations, both Democratic and Republican on misguided trade policies that impoverished the US middle class and furthered monopoly.

Recent counterproductive trade moves do not validate Lighthizer’s flawed interpretation of post-war US trade policy.

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