America's protectionist president has chosen escalation. And now so should the Republican-controlled Congress.
President Trump's foolish trade war could easily send America's accelerating economy into the ditch. But Trump, against all evidence, doesn't seem worried. That leaves it up to his party to take action against its leader and for its supposed free-market principles.
If you're a super-optimist, the GOP pushback has already begun. On Wednesday, a day after the Trump administration's announcement that it plans to hit China with 10 percent tariffs on a further $200 billion in Chinese goods, the Senate voted 88-11 in favor of a GOP-authored provision that would give Congress a role when the president tries to levy tariffs on national security grounds under Section 232 of the Trade Expansion Act of 1962. That's the section the Trump administration has cited as legal rationale to levy 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports.
Free traders should keep their expectations low, however. The provision was non-binding, and it wouldn't have passed without Democratic votes. Only 39 Republicans voted for it, and at least one GOP senator, Thom Tillis of North Carolina, said he would not actually vote for the resolution if it had the force of law; he just wanted to support a non-binding signal.
But it is long past time for signals and symbolic measures. After all, Trump was barely in office when he yanked America from the Trans-Pacific Partnership. And while the 2017 Trump agenda centered on health care and tax cuts, 2018 has been dominated by Trump's trade conflict with, well, pretty much everybody. This is exactly what candidate Trump promised, although too many in Washington and Wall Street bet that Trump's 40-year hostility to free and open trade was really just empty rhetoric. How wrong they were.
If the GOP is really the pro-growth party of free markets, it must go beyond its squishy, cowering opposition to Trump's trade war and start pushing actually binding legislation requiring congressional approval before levying tariffs using that national security justification. Congress should begin to reclaim the trade authority it has spent decades giving away to the executive branch. Such legislation has been introduced in the House and Senate by Republicans. But its chances look dicey at best. House Speaker Paul Ryan told reporters Wednesday that while he opposes tariffs, he doesn't want "to hamstring the president's negotiating tactics."
What negotiation? According to Kevin Brady, the GOP chairman of the powerful House Ways and Means Committee, "Despite the serious economic consequences of ever-increasing tariffs, today there are no serious trade discussions occurring between the U.S. and China, no plans for trade negotiations anytime soon, and seemingly little action toward a solution."
Moreover, what does Ryan think Trump's endgame is? It certainly seems reasonable that what Trump and his trade hawk advisers are trying to accomplish — and the president's hostile and disruptive behavior at the NATO summit is more proof of this — is the dismantling of the post-WWII economic and security structure that continues to help ensure global peace and prosperity. To be replaced by what? Oh yeah, a slogan: America First.
Maybe only further escalation and the resulting economic damage — from growth to jobs to the stock market — is what will get the GOP to finally take action against Trump. And that might happen, unfortunately. A new analysis by consultancy Capital Economics estimates that a full-blown global trade war could eventually reduce world GDP by 2–3 percent and U.S. GDP by around 1 percent. And "the hit to profits of U.S. multinational firms would be more severe." Even worse, all this could potentially hit just as the fiscal stimulus from tax cuts and spending increases fades, slowing growth.
But it shouldn't take an economic slowdown or recession for Republicans, raised on Reaganomics, to do what most surely know is the right thing.