Twice in the same week, President Donald Trump and his best friends in Iowa threw themselves unearned victory parties over international trade.
On Wednesday, Trump signed a trade agreement with China, presented by the administration as yet another big, historic, perfect accomplishment. On Thursday, the Senate voted for final approval of the U.S.-Mexico-Canada Agreement, or USMCA, the crown jewel of Trump’s first term.
Predictably, Trump boosters from Iowa were quick to offer their praise. China, they note, is one of the top international consumers of our state’s agricultural products.
U.S. Sen. Chuck Grassley called the China deal a “very positive development.” U.S. Sen. Joni Ernst told Bloomberg TV it will be a “big boon for Iowa farmers.” Even former Gov. Terry Branstad, now Trump’s ambassador to China, made a trip back to the United States for the supposedly momentous occasion.
In a video posted to the White House Facebook page, Gov. Kim Reynolds said, “Any time we can have free and fair trade, our Iowa producers and farmers will win every single time.”
Republicans are correct that Iowa farmers would benefit from free trade. Problem is, neither of the trade deals they’re cheering will promote free trade.
Contrary to all the glowing political rhetoric, the new China agreement is the exact opposite of a free trade deal. While the administration has not released all the details, we know it commits China to purchase certain quantities of American goods, and likely maintains most of the tariffs the countries hold against each other.
This is managed trade, not free trade. It’s a classic example of central economic planning, which is supposed to be a Chinese value, not an American one, and certainly not a Republican one.
Amazingly, elite Democrats delivered even worse takes about trade. Many of them want the United States to intervene even more heavily in foreign economies.
“I fear that President Xi is laughing at us behind our backs for having gained so much at our expense. … The Chinese took us hook, line and sinker,” Senate Democratic Leader Chuck Schumer said in a floor speech.
This line of thinking reflects and encourages Trump’s worst instincts on international trade — the ideas that prosperity can be achieved through economic warfare, and that a trade imbalance is necessarily a bad thing.
Political posturing over China reminds us of USMCA, a slightly updated version of the 1994 North American Free Trade Agreement.
Last month — when the Trump administration and Congressional Democrats announced an agreement on USMCA terms — Republicans wrongly trumpeted it as another historic accomplishment, Democrats misguidedly complained that it didn’t impose enough restrictions on the Mexican economy.
Republicans’ and Democrats’ positions are not far apart. Both favor heavily restricted trade, they only differ on who gets to take credit.
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In the span of about 20 years, the United States has gone from having two major parties generally in favor of free trade to having zero such parties represented in government. The world is poorer because of it.
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