Trump's new trade war is with Senate Republicans
Critics of President Trump from the center and left like to say that Republican office holders defer to him far too easily and often. But now we know this isn't always true. There are some lines Republicans just won't cross and principles they just won't compromise — and those are the lines and principles that benefit business.
How else to explain the unprecedented expressions of presidential disapproval emanating from the Senate this week in response to Trump's stated intention to impose tariffs on Mexico as a way to motivate the Mexican government to stem the flow of migrants (often from third-party countries in Central America) streaming toward the southern border?
Trump may think (absurdly) that trade wars are good and easy to win, but it's hard to see how that could be true about a war between the White House and Senate Republicans — especially with it widening to other areas of policy. The last thing Trump needs as he heads into a re-election campaign is for his until-now rock-solid Republican support to soften. With persistently low approval ratings in the electorate at large, the one thing the president has going for him is historically high approval among his own party. If that comes to an end, Trump could wind up being maximally vulnerable as he heads into the general election.
But will it happen?
It all depends on whether Trump stands his ground — and then on whether the Republican electorate sides with him or the U.S. Chamber of Commerce. The enormously powerful business lobby exercises considerable influence on Republican legislators, most of whom have grown accustomed to having their ideological priors reinforced and rewarded by the business sector and its largesse.
Free trade first became official government policy in the United States after World War II, and it has grown more dominant ever since. With the election of Ronald Reagan, it became one of the bedrock principles of the GOP, and after the demise of the Soviet Union and end of the Cold War, the center of gravity in both parties shifted in its direction.
Libertarian-minded Republicans love to claim that free trade is essential to economic growth, and through the postwar and Reagan-era booms, it certainly didn't hurt. But was it really a — let alone the — key variable in generating growth? It's hard to make that case when the United States had some of the highest tariffs in the world through the era of economic take-off that transformed America in the decades following the Civil War. The history of that era shows that high tariffs can be quite compatible with rapid growth, at least sometimes and under some conditions.
But companies have grown used to doing business without tariffs increasing their costs, and they don't want to pass those costs onto consumers out of fear that doing so will hurt sales. The anti-tax ideology of the GOP, meanwhile, gives Republican politicians a ready-made way to make the case against tariffs without having to sound like they're doing the bidding of CEOs and shareholders. Tariffs raise government revenue, and that makes them a form of taxation. Therefore they are bad.
Will that simplistic syllogism (with its assumed and unargued-for minor premise: “taxation is always bad”) prove as persuasive with voters as it is with politicians attempting to please business lobbyists? We really don't know, because no prominent Republican has challenged it for decades — at least until now.
Up to this point, Trump has been raising tariffs for economic purposes — to give the U.S. leverage in negotiations over trade, with the implication being that a resolution of the trade stand-off would result in a return to the status quo ante of mostly open markets, though on slightly more favorable terms for Americans. Within that narrow purview, the Republican rank-and-file has proved quite willing to support the president.
What's interesting and new about Trump's latest gambit is that it's not about economics at all. The president is trying to use tariffs as leverage in a dispute with Mexico about immigration. This is unorthodox in recent American history, but it's not as if the U.S. doesn't use economic leverage to conduct foreign policy all the time. What are the sanctions we readily impose on countries around the world if not an attempt to use the infliction of economic pain to get governments to bend their wills to our wishes?
The difference here is that American consumers will end up bearing the brunt of the cost. Will they accept the trade-off? The answer will probably depend on whether they support the policy being advanced by the tariffs. If Trump effectively makes the case that the cost of the Mexican tariffs is worth paying because getting immigration under control is an important national priority, we would expect Republican voters who agree with the president on immigration to go along.
Unless, that is, the Republican electorate is still more persuaded by Reaganite boilerplate about the evils of taxes and protectionism and the omnibenevolent consequences of increasing business profits.
From the moment Trump announced his presidential campaign four years ago, he declared war on the ideological pieties espoused by his party. This week Senate Republicans started fighting back. Whether the battle drags on, racking up casualties along the way, will depend in large part on which side the voters prefer.
Four years into the Trump Show, I know which side I expect to prevail.