The Rise and Fall of Protectionism in the United States
The Smoot-Hawley tariff of 1930 contained some of the highest tariff rates in U.S. history. It is widely regarded as one of the greatest blunders in economic policy in the history of the nation. It was intended by the Congress to protect jobs and wages of American workers, but trading partners retaliated, and it ended up hurting both Americans and their trading partners. Republican President Herbert Hoover signed the tariff bill, in spite of strong opposition that included a petition signed by over 1000 economists. Democratic President Franklin Roosevelt campaigned against Smoot-Hawley in the 1932 election, and he and his Secretary of State, Cordell Hull, tried to undo the negative economic effects of Smoot-Hawley, beginning with the Reciprocal Trade Acts of 1934. Hull won the Nobel Peace Prize for promoting international economic and political cooperation. Subsequently, Democratic Presidents generally supported freer trade policies. John Kennedy gave his name to the Kennedy Round of multinational trade agreements, and Bill Clinton promoted the regional North American Free Trade Agreement. Clinton played an active role in the passage of NAFTA, in spite of opposition from within his own party. Democrats in the Congress joined their Republican colleagues in granting fast track authority to every President from Gerald Ford to George W. Bush, until it expired July 1, 2007.
RISE OF PROTECTIONISM
However, over time Democratic support for freer trade has diminished, and Democrats have become the more protectionist party. Robert Samuelson (2015) has referred to the recent strong opposition to trade initiatives, especially among Democrats in the Congress, as a possible watershed in US trade policy. If protectionism succeeds, it would be a sharp break with the generally pro-trade policies that have dominated since FDR and Cordell Hull. In his first term, with a Democratic Senate and House, President Obama was the first President since 1975 to lack fast track authority. The only trade agreements (with Panama, South Korea, and Colombia) approved by the Congress during Obama’s first term were those negotiated earlier by the Bush administration, and they did not pass until Democrats lost control of the House in 2010. Although he announced his “Pivot to Asia” policy, the President did not formally request fast track authority in his first term, possibly because of strong opposition from Democratic leaders, Harry Reid in the Senate and Nancy Pelosi in the House.
It was not until the sixth year of his Presidency, after Democrats lost control of the Senate in 2014, that Mr. Obama received fast track authority from a reluctant Congress. In the Senate the procedural vote necessary to bring the fast track bill to a vote received the minimum number of votes necessary. Support was heavily Republican with 47 Republican Senators voting in favor and only 13 Democrats supporting the Democratic President. Democratic Congressional leaders, Harry Reid and Charles Schumer in the Senate and Nancy Pelosi in the House, voted against bringing fast track to a vote. In the House only 28 Democrats voted in favor. President Obama signed the fast track and Trade Adjustment Assistance bills on June 28, 2015. Congressional Democratic leaders announced that they will continue to oppose trade agreements, and union leaders promised to punish Democrats who vote for freer trade.
President Obama, himself has demonstrated lukewarm and inconsistent support for a more open economy. He continues to oppose the Keystone pipeline, and he has shown no support for abandoning the prohibition on crude oil exports from the U.S. The US Trade Representative, Michael Froman, has been negotiating the Trans-Pacific Partnership (TPP) with 11 Asian countries and the Transatlantic Trade and Investment Partnership (TTIP) with the European Union, although the President has not taken a strong leadership role until his recent effort to pass fast track. On this subject, as in others, he has been criticized for “leading from behind”. Relative to all previous Presidents, the Obama sequencing of first negotiating agreements and then requesting fast track authority is backwards. Fast track is a promise by Congress to vote an agreement up or down without an amendment, and it is intended to simplify and speed up negotiations. Until now, Congressional approval of fast track authority has preceded trade negotiations.
SOURCES OF RISING PROTECTIONIST PRESSURE
What has caused the increase in protectionist sentiment, especially among Democrats? First, there has been a change in the comparative advantage of the American economy away from important manufactured products, such as steel and automobiles. The US was once the major exporter of these products, and the United Steel Workers and United Auto Workers Unions were strong supporters of freer trade within the Democratic Party. When the country became a net importer of these products, the unions reversed their positions on trade policy. After China opened its economy to trade, it received “most favored nation status” and became a member of the World Trade Organization, US producers lost their comparative advantage in several manufactured products. Secondly, in addition to steel and autos, employment has declined across a large number of industries within manufacturing sector, and many critics have blamed trade for this decline. Attributing this decline to trade is questionable, since technology has played a major role in reducing manufacturing employment at the same time it increased manufacturing output by raising worker productivity (Baily). Also the share of manufacturing employment in total employment has declined in all the high income countries, not just the United States. Third, the increased inequality of the income distribution has also been attributed to trade by many critics. This attribution is also questionable, since the same change has been observed in many countries, and it is related to technical change that is biased against the use of labor with middle skills and middle wages. Fourth, some protectionists claim that trade contributes to lower environmental standards and a “race to the bottom”. Finally, populism has become more fashionable, especially among some Democrats who claim that trade benefits only multinational corporations, Wall Street, and billionaires. Senators Elizabeth Warren and Bernie Sanders have resorted to populist rhetoric, and columnists, such as Paul Krugman, who once supported freer trade, now sound increasingly protectionist. George Soros opposed fast track (Drezner). Hillary Clinton, currently the favorite to be the next Democratic candidate for President, so far refuses to take a clear stand on trade agreements, even though she regularly spoke in favor of promoting trade in her role as Mr. Obama’s Secretary of State. She has recently resorted to Populist language by railing against “CEOs and hedge fund managers” and “billionaires and corporations”.
Based on recent Congressional voting, Democrats have become the more protectionist party, but they have no monopoly on protectionism. Some Republicans, such as Senator Ted Cruz, have also spoken out against fast track on the grounds that they cannot trust the President to implement and enforce the policies he proposes. President George W. Bush imposed a tariff on steel in 2002-2003 that was determined to violate WTO rules.
THE FUTURE OF US TRADE POLICY
Protectionism has grown in the US, and the main reasons given for increased opposition to trade are its alleged adverse effect on employment and wages in manufacturing, its alleged contribution to income inequality, and its alleged harmful effect on the environment.
Although protectionism is stronger in the Congress than in the recent past, there are also some current factors contributing to freer trade policies. Now that fast track authority has been re-authorized, the Administration has an opportunity to negotiate a complex TPP agreement with Asian countries, and present it to the Congress for an up or down vote. This process is expected to take time, and it may carry over into the 2016 Presidential campaign, that has already begun. The U.S. Trade Representative, Michael Froman, is also in the process of negotiating a complex TTIP agreement with 28 members of the European Union. The US and EU account for 60% of world GDP, 33% of trade in goods, and 42% of trade in services. Since current tariff levels among these countries are rather low, the biggest potential gains are from reducing non-tariff barriers. The USTR is also negotiating an Information Technology Agreement that would cover 97% of IT trade and an Environmental Goods Agreement. There is also a Trade in International Services Agreement that includes 24 countries and 67% of the world’s services, such as banking and communication (Palmer 2015). More than 80% of US workers are currently employed in the service sector, but continued expansion of the service sector is likely to have an ambiguous effect on protection. Tariffs have rarely been imposed on service trade, and the lower level of unionism in services would contribute to less protectionism. However, services are less traded internationally than manufactured products, and they are subject to many non-tariff barriers.
GEO-POLITICAL ASPECTS OF TRADE POLICY
Trade policies are based on geo-political issues as well as economic costs and benefits. The US has re-established diplomatic relations with Cuba, which could lead to the end of a trade embargo that began in 1959. Negotiations over a nuclear agreement with Iran could lead to the end of the trade embargo against Iran. Trade relations with Russia have moved in the opposite direction, as the US and NATO allies have imposed sanctions after Russian aggression in Ukraine, and Russia has retaliated with its own trade sanctions.
US relations with China remain an important and unsettled issue. Fareed Zakaria has asked, “What Happened to Obama’s Pivot to Asia?” Most of the attention of the pivot has focused on deterring aggressive actions by China. Deterrence is legitimate and necessary for maintaining peace in the region, but the US could simultaneously cooperate with China and encourage its integration into the world economy. China has the largest economy in Asia, and it is one of the largest trading countries in the world. Economic cooperation with China could provide gains to both countries. Does the Pivot to Asia mean always treating China as the enemy, or could it also mean seeking ways to achieve mutual benefits? As the largest Asian trading nation, China is conspicuously absent from the TTP. US opposition to the China-led Asian Infrastructure Investment Bank does not appear to have been based on economic considerations, and it has been described by some observers as “quite simply, dumb” (Zakaria). Among the 57 founding members are many U.S. allies, such as the United Kingdom, Germany, Australia, and most Asian countries (Irish Times). The United States is conspicuously absent.
A rise in protectionism by the US government would be bad for the US economy, but it would also be harmful to the world economy. International agencies, such as the World Trade Organization do play a role in promoting beneficial trade, but they have limited authority. The most important forces for an open world economy are the policies of the largest trading countries, especially the United States. Presidential candidates Hillary Clinton and Jeb Bush have both advocated a goal of returning to 4% real growth for the U.S. economy, and removing obstacles to mutually beneficial trade would contribute to this goal (Galston). The historical periods of greatest global prosperity have been marked by the absence of major wars and the pursuit of open trade policies by the major trading countries. Pax Romana and Pax Britannica were periods in which leading governments used their power and influence to create conditions conducive to freer trade.
There has been an increase in protectionist sentiment in the US that raises the question as to whether there will be a reversal of US trade policy that has been mostly open since 1934. Protectionist sentiment is especially strong now among Congressional Democrats. However, in spite of Democratic opposition, the Congress did grant fast track authority to the President, and the Administration is moving forward with negotiating the TPP agreement with Asian countries. The US Trade Representative is also negotiating the TTIP agreement with the European Union, as well as more specialized agreements covering information technology, services, and environmental goods. It remains to be seen as to whether the forces of protectionism or freer trade will prevail, but questions about trade policy will continue to be contentious issues for the rest of the Obama Administration and during the next Presidential election.
Baily, Neil. 2015. “How the U.S. Gets Manufacturing Policy All Wrong”. Wall Street Journal, June 3.
Drezner, Daniel. 2015. “The Dumbest Argument Against Trade Promotion Authority I’ve Seen Yet”. Washington Post, June 23.
Galston, William. 2015. “Hillary Got It Right About Growth”. Wall Street Journal, June 17.
Irish Times. 2015. “Countries Sign Up for China-Led Asian Infrastructure Investment Bank”. July 6.
Palmer, Doug. 2015. “US Trade Vote Puts TTIP on Faster Track”. www.politico.eu/article/us-trade-vote-ttip-obama/
Samuelson, Robert. 2015. “A Trade Watershed?” Washington Post, May 3.
Zakaria, Fareed. 2015. “What Ever Happened to Obama’s Pivot to Asia? Washington Post, April 16.
44 Responses to “The Rise and Fall of Protectionism in the United States”
Look for direction from a stage seller on safe computing,Camisetas Lacoste Hombre
Thanks, I’ve just been looking for information about this topic for a long time and yours is the best I’ve discovered till now. However, what concerning the conclusion? Are you sure concerning the source?
download triplets of belleville How are You, you must see those sites property ads and friendship and mobile phones
How are You, you must see those sites property ads and friendship and mobile phones
http://www.godir.co.uk/drugs-library.com-204567.h… http://www.linksthunder.com/drugs-library.com-127245.html, http://www.lovelydir.info/drugs-library.com-23350… http://www.cutedirectory.net/drugs-library.com-29067.html, http://www.dirsystem.net/drugs-library.com-76412…. http://www.technodir.co.uk/drugs-library.com-217104.html, http://www.cerako.com/drugs-library.com-30232.htm… http://www.cennettur.com/drugs-library.com-113003.html, http://www.mywebdir.org/drugs-library.com-111976…. http://www.directory-portal.net/drugs-library.com-218653.html, http://www.a2zlink.co.uk/drugs-library.com-255844… http://www.backpagedir.com/Homeopathic-Remedies_173082.html, http://www.facebook-list.com/Medicine-Search_1660… http://www.internet-dir.co.uk/drugs-library.com-68607.html, http://www.webworldindex.co.uk/drugs-library.com-… http://www.free-text-links.co.uk/drugs-library.com-64289.html, http://www.seo-submission.co.uk/drugs-library.com… http://www.free-backlinks.co.uk/drugs-library.com-59291.html, http://www.redumavida.net/drugs-library.com-16603… http://www.clicksordirectory.com/details.php?id=180585, http://www.wapic.org/drugs-library.com-97428.html… http://www.live-listings.co.uk/drugs-library.com-219718.html, http://www.amazingweblinks.net/drugs-library.com-… http://www.dirleader.com/drugs-library.com-190394.html, http://www.links4free.co.uk/drugs-library.com-208… http://www.oneway-linkbuilding.co.uk/drugs-library.com-216964.html, http://www.website-submission.co.uk/drugs-library… http://www.dirnation.com/drugs-library.com-92358.html, http://www.dirmarketing.net/drugs-library.com-551… http://www.dirzone.org/drugs-library.com-80177.html, http://www.dirwatch.com/drugs-library.com-227539…. http://www.premium-directory.co.uk/drugs-library.com-129972.html, http://www.perfectdirectory.co.uk/drugs-library.c… http://www.linksjuice.info/drugs-library.com-126223.html, http://www.linkspedia.info/drugs-library.com-1194… http://www.max-links.net/drugs-library.com-203855.html, http://www.officialdir.net/drugs-library.com-2487… http://www.webdir.org.uk/drugs-library.com-65007.html, http://www.weburl.org.uk/drugs-library.com-334624… http://www.cieura.org/drugs-library.com-60126.html, http://www.alivedir.net/drugs-library.com-141569…. http://www.internet-webdirectory.co.uk/drugs-library.com-199938.html, http://www.seomantra.co.uk/drugs-library.com-1901… http://www.web-mantra.co.uk/drugs-library.com-132179.html, http://www.webseodir.co.uk/drugs-library.com-3321… http://www.dirsubmission.co.uk/drugs-library.com-76309.html, http://www.wiki-directory.co.uk/drugs-library.com… http://www.deeplinksdirectory.co.uk/drugs-library.com-145324.html, http://www.linkspro.org/drugs-library.com-100903…. http://www.freeweb.org.uk/drugs-library.com-284951.html, http://www.uniquelisting.co.uk/drugs-library.com-… http://www.free-directory.org.uk/drugs-library.com-93247.html, http://www.dirstation.com/drugs-library.com-27311… http://www.indexweblink.com/drugs-library.com-174810.html, http://www.linksresources.net/drugs-library.com-1… http://www.technodir.net/drugs-library.com-2779477.html, http://www.best-web-directory.co.uk/drugs-library… http://www.bestsitelisting.com/drugs-library.com-64049.html, http://www.dirthunder.com/drugs-library.com-12137… http://www.brandsintheair.com/drugs-library.com-33493.html, http://www.simplydir.net/drugs-library.com-138458… http://www.addtoweb.co.uk/drugs-library.com-72582.html, http://www.web-site-directory.co.uk/drugs-library…
Wonderful website. A good amount of helpful info here.
I’m sending it to several pals ans additionally sharing in delicious.
And certainly, thanks for the sweat!
Nice content, I will share this
Nice post. I learn something totally new and challenging on websites I stumbleupon every day.
It’s always helpful to read articles from other
authors and practice something from other web sites.
I’d incessantly want to be update on new articles
on this internet site, saved to favorites!
Some genuinely nice and useful information on this site,
as well I conceive the pattern holds fantastic features.
EconoMonitor : Thoughts From Across the Atlantic » The Rise and Fall of Protectionism in the United States
I could not resist commenting. Well written!
If you are going for most excellent contents like myself, just
pay a visit this site daily for the reason that it presents feature contents, thanks
I simply wished to thank you so much once again. I’m not certain the things I would have carried
out in the absence of the techniques shown by you about my problem.
It was actually a difficult issue in my circumstances, but coming across the very skilled tactic you solved it made me to jump with joy.
I will be grateful for your work and thus hope that
you find out what a powerful job that you are carrying out educating
most people via your blog post. Probably you’ve never got to know
any of us.
If you are going for finest contents like myself, only pay a visit this web page all the time
for the reason that it provides feature contents, thanks
Does your blog have a contact page? I’m having problems locating it but, I’d like to
shoot you an email. I’ve got some recommendations for your blog you might be
interested in hearing. Either way, great website and I look forward to
seeing it develop over time.
What human Chorionic Gonadotropin does is exactly mimic the luteinizing
hormone (LH) that your brain uses to indicate the need for testosterone pdoduction by the testes.
You’re no longer getting optimum outcomes from disciplined work
outs, and dieting.
Helpful information. Lucky me I found your site accidentally, and I am surprised why this accident didn’t took place in advance! I bookmarked it.
Some off the benefits off HGH, Human Growth Hormone replacement treatment are
a reduction of fat, a gan of new muscle, decrease of wrinkles (aka healthy and thicker skin), re-development or regeneration of internal organs, increase
bone sstrength and density, reinforce or
balance the immune system annd general anti-aging properties.
Wow, this paragraph is nice, my sister is analyzing such things, so I am going to let know her.
I don’t even know how I ended up here, but I thought this
post was good. I do not know who you are but certainly
you’re going to a famous blogger if you are not already 😉 Cheers!
They uncovered the event rate at three years was low in both the treated group at 5.5 percent and in tthe
untreated group at 6.7 percent, suggesting a potentjal cardiovascular benefit
of testosterone replacement treatment on first analysis.
Hey I am so thrilled I found your blog, I really found you by error, while I was browsing on Aol for something else, Regardless I am here now
and would just like to say cheers for a tremendous post and a
all round entertaining blog (I also love the theme/design),
I don’t have time to look over it all at the moment but I have bookmarked it and also added in your RSS feeds, so when I have time I will be back to read
a great deal more, Please do keep up the awesome b.
This article is truly a fastidious one it helps new the web people, who are
wishing for blogging.
Many people that are new to portable vapes prefer to begin below to obtain a feeling
for it before investing money on a higher end device.
Each of the things below is a 3-in-1 vape pen valued less than $100 and
also they all share some facets in common, both good and also negative.
The Pulsar APX is a functional vaporizer that offers you the ability to vape
both dry herb and also wax focuses with ease.
Hello there, just became aware of your weblog through Google,
and found that it’s truly informative. I am gonna be careful for
brussels. I will appreciate should you continue this in future.
Many folks might be benefited from your writing. Cheers!
You could definitely see your enthusiasm within the work you write.
The sector hopes for even more passionate writers like you who aren’t afraid to mention how they believe.
Always follow your heart.
Hello there, just became alert to your blog through Google, and found that it’s truly informative.
I’m going to watch out for brussels. I’ll appreciate if you continue this in future.
A lot of people will be benefited from your writing.
Hi there! I could have sworn I’ve been to this site before but after browsing through
some of the post I realized it’s new to me. Anyways, I’m definitely glad I found it and I’ll be book-marking and checking back frequently!
great points altogether, you just gained
a new reader. What could you suggest about your post that you simply
made some days ago? Any sure?
You can certainly see your skills in the work you write.
The world hopes for more passionate writers such as you who aren’t afraid to say how
they believe. Always follow your heart.
5 device should have come with a CD ROM that includes either or both of these apps as well as device drivers to assist with USB connections between your PC and phone ‘ perfect for installing apps that you have downloaded from the web to your computer.
In fact, British television comedy shows have been so influential that a lot of them have been remade for
American audiences, such as is the case for The Office, All in the Family, and Three.
With all these changes having taken place, Jersey Shore Season 6 has all the makings of a
You can definitely see your enthusiasm in the paintings you write.
The arena hopes for even more passionate writers like you
who aren’t afraid to mention how they believe. Always follow
Thank you for the sensible critique. Me & my neighbor were just preparing to do a little research on this.
We got a grab a book from our area library but I think I learned more from this post.
I’m very glad to see such magnificent information being shared freely out there.
I cling on to listening to the news talk about getting boundless online grant applications so I have been looking
around for the most excellent site to get one.
Could you tell me please, where could i acquire some?
Irrespective of thee rkute of administration, studies have shown progress in libido
and sexual function in hypogonadal men.
Hello! Quick question that’s totally off topic.
Do you know how to make your site mobile friendly?
My web site looks weird when viewing from my iphone4.
I’m trying to find a template or plugin that might be able to correct this issue.
If you have any suggestions, please share.
Hello, i think that i saw you visited my web site so i came
to “return the favor”.I’m trying to find things to enhance my site!I suppose its ok to use a few of your ideas!!