President Trump’s position on foreign
trade won him support in traditionally
Democratic states that had lost
manufacturing jobs. However, the
financial markets reacted negatively
once he started acting on his
campaign promise. Though it may
seem like tariffs on steel and aluminum
will help those industries, the overall
impact of the trade barriers is almost
certain to cost some factory workers
their jobs.In the 2016 presidential campaign, Donald Trump made foreign trade one of his
central themes. One important way to “Make America Great Again,” according to
Trump, was to rip up bad trade deals, get foreign countries to start treating the United
States fairly, and bring jobs back to the country. In a campaign speech Trump said, “We
allowed foreign countries to subsidize their goods, devalue their currencies, violate
their agreements and cheat in every way imaginable, and our politicians did nothing
about it.”^1 This position won him the support of traditionally Democratic states that had
lost manufacturing jobs, like Pennsylvania, Michigan, and Wisconsin, and helped propel
him to victory.
Shortly after taking office, the president pulled out of the Trans Pacific Partnership
(TPP), a pact with 11 nations that was aimed at reducing barriers to trade and improving
the members’ economic position relative to that of China. In 2018, President Trump
imposed tariffs on aluminum and steel on the grounds of national security, started a
trade war with China, imposed tariffs on our allies (such as Canada and the European
Union), and pressured Mexico and Canada to renegotiate the North American Free
Trade Agreement (NAFTA).
The reaction of financial markets, the United States’ allies, most economists,
and even some Republicans in Congress (as reflected in the quote from Senator
Sasse)^2 was very negative. The Republican Party has been a strong supporter of free
trade and Democratic leadership supports most free-trade treaties. These critics of“When a country (USA) is losing many billions of dollars on trade with
virtually every country it does business with, trade wars are good, and
easy to win.”
President Donald Trump“Hopefully the president is just blowing off steam again but, if he’s even
half-serious, this is nuts.”
Senator Ben Sasse (R-NE)15
Economic Policy
How does the government
help promote a strong
economy?
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