Trade Trumps Tariffs

Glenn Hamer

March 21, 2016

The case for protectionism has featured so prominently in the 2016 presidential election that you would think that we’ve been transported back in time to when Smoot and Hawley were the most talked about names on the political scene.

From frontrunners to also-rans, candidates in both parties have told us this election that trade kills jobs, that Mexico and China are embarrassing us, and that if they’re elected we can look forward to an American economy that runs on high tariffs on imported goods. Got your eye on a new German sports car? Better act now. Who knows how much that sweet ride is going to cost a year from now.

The bipartisan coalition on trade has shattered. My first gig on Capitol Hill was as a law school intern for former Arizona Rep. Jim Kolbe in the early 1990s during the negotiations over the North American Free Trade Agreement. There was no more stalwart a champion for free trade in Congress than Rep. Kolbe at that time. I got a fly-on-the-wall perspective on one of the most consequential policy victories of that era. Today’s political conversation needs more Jim Kolbes.

NAFTA was negotiated under Republican President George H.W. Bush and passed off to Democrat Bill Clinton for final adoption. (Remember when Vice President Al Gore was dispatched to debate populist protectionist Ross Perot with his pie charts and claims of a “giant sucking sound” on Larry King Live?) Both parties were able to recognize the value to U.S. job creators and consumers to make the groundbreaking trade agreement a reality.

More bipartisan trade wins followed. Permanent Normal Trade Relations with China. The Central American Free Trade Agreement. Free trade deals with Colombia, Panama and South Korea. Trade Promotion Authority.

My, how things have changed. Free trade is the unofficial punching bag of campaign 2016.

Trade creates jobs. Most distressing about the rhetoric on trade this campaign is the outbreak of economic illiteracy that has gripped the candidates.

Thirty-eight million U.S. jobs depend on trade. Six million U.S. jobs depend on trade with Mexico. Shutting down free trade deals and constructing economic barriers between our country and the rest of the world is a surefire way to destroy U.S. jobs, especially the good-paying manufacturing jobs that candidates say they want to attract and retain.

Central to the case for international trade is the concept of “make it here, sell it there.” Ninety-five percent of the world’s consumers live outside the U.S. If we make U.S.-made goods too expensive for the world’s consumers, our manufacturers will see their customer base shrink dramatically. You can’t be for U.S. manufacturing and opposed to free trade.

Protectionism hurts the middle class. Want a man-made hike in the cost of living for the average American? Start slapping high tariffs – trade taxes – on imported goods. A trip to the produce section of your grocery store in the winter months will be a joyless slog of picking through expensive fruits and vegetables of limited quantity and quality.

Take Mexican-grown tomatoes, for example, which during the cold-weather months fill up trucks making their way through the commercial port of entry in Nogales. If the next president makes those tomatoes more expensive, consumers pay the price at the checkout line, not to mention the jobs that will be lost by the produce brokers in southern Arizona who get the goods to market.

These presidential candidates, who claim to be such champions for the average working Joe, have apparently forgotten that robust international trade means a better deal for U.S. consumers through increased competition on store shelves and greater variety in choice.

Our trade partners read electoral maps, too. Let’s not kid ourselves that the rest of the world can’t read an electoral map. When we make goods imported from another country more expensive and less competitive here, the tit for tat begins, as the harmed country looks to punch back.

Swing states are particularly vulnerable in a trade war. When the next president moves to make Mexican-manufactured air conditioners more expensive here, don’t be surprised when Harley-Davidson motorcycles from Wisconsin begin to lose market share south of the border.

Arizona is a big loser in an anti-trade administration. Nearly 100,000 Arizona jobs depend on trade with our NAFTA partners, Canada and Mexico. An administration bent on kicking off a trade war is putting Arizona jobs at tremendous risk.

Arizona has achieved real momentum on trade, especially with Mexico. We have record exports to that country, a newly remodeled Mariposa port of entry in Nogales, two trade offices in the country, and a strong relationship with our counterparts in Sonora.

So much of that goodwill is scuttled if the economic relationship between Arizona and Mexico is damaged by a president who doesn’t appreciate the positive power of trade.

There is palpable angst in the country. Workers have seen jobs that the middle class could once depend on fade away. This isn’t a trivial issue and it deserves serious policy remedies. But how many U.S. companies have to move their operations to foreign shores before we look at our highest-in-the-industrialized-world corporate tax rate, or our job-killing regulatory state? Those are the issues the presidential candidates should be focused on.

Trade wars cause recessions. They don’t make America great again.

Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry