The threat to trade

A “giant sucking sound” was Henry Ross Perot’s famous description of alleged job losses due to free trade policies, and many Americans now seem to be hearing one. Most now believe that the United States has lost more from increased trade than it has gained. Past free trade policies have been rolled back, as both the Biden and Trump administrations saw a decrease in trade freedom. Trump’s running mate J.D. Vance sees tariffs, or taxes on trade, as a viable way to raise revenue for the government.

The current critique of free trade is a long way from the bipartisan origins of deals like the North American Free Trade Agreement. Across the board, trust in major institutions and experts is in steep decline. Conspiracy theorist Robert Kennedy Jr. was nominated to lead the Department of Health and Human Services. This lack of trust in institutions has led to a rise in nationalist populism, political rhetoric that seeks to appeal to the “common man” — and a decline in democracy. The debate over free trade mirrors the wider conflict between voters at different levels of education, as more educated citizens are more likely to support it. The neoliberal economic consensus that emerged in the U.S. under President Ronald Reagan is fracturing, with openness to trade just one casualty.

“I’ve noticed different candidates proposing tariffs, using phrasing that suggests that [tariffs] will benefit the United States but not acknowledging the benefits that free trade has,” economics teacher Rachel Money said.

The new status quo could be attributable to the COVID-19 pandemic. Ruling parties across the globe suffered due to anger over the disruptions and deaths caused by the pathogen. Political polarization worsened due to partisan conflict. Supply chain disruptions harmed faith in globalism as an institution. However, although many critiques of pandemic management are fair, it is nonsensical to continue blaming the institutions and leaders who happened to be in power during lockdowns. The United States is, for better or worse, fully reliant on China to survive economically; ending trade relations with them was never an option. A couple of questionable choices aside, governments around the world can’t be said to have caused the pandemic. Holding them responsible for its impacts is absurd.

“COVID changed how people saw our current trade and economic connections,” AP Comparative Government teacher Mel Trotier said. “When COVID shut [those] down, we saw product shortages. Even [the impact of a] tanker getting stuck in the Suez Canal showed how dramatic our international trade systems actually are. The backlash to that [caused] people [to ask], instead of relying on trade, which could be disrupted, what if we produce things domestically, and we don’t rely on other countries for products?”

Why we trade

The need for an economic course correction is vastly oversold. Senator Bernie Sanders blasted the Democratic Party, with which he caucuses, for ignoring workers and upholding the economic status quo. However, the U.S. economy has been performing well of late, and wages have been rising. More negative consumer sentiment may well be due to biased news coverage rather than actual stagnation. COVID-19 caused high inflation in the United States, and that simply isn’t a reason to pursue different economic policy instead of doing what we know works.

“Being able to focus on what [a] country is best able to [put] resources towards producing [creates benefits]. Generally, when we see free trade agreements being created, that benefits citizens and businesses in both countries that are part of the trade agreement,” Money said.

Free trade agreements are frequently blamed for a decline in manufacturing employment and certainly increase inequality due to considerable benefits that accrue to the wealthy. However, this isn’t the full picture, because the rich aren’t the only ones who benefit. Some of the biggest winners from free trade are actually those in poverty — global poverty rates have plummeted due to recent globalization. Benefits accrue to working-class and poor Americans, as well.

“[Trade restrictions] impact every population. People who are not college educated [or] are working lower-paying jobs [are] going to feel it [if] grocery bills [rise] 20 [or] 30%,” AP Microeconomics student and senior Colin Hughes said.

Productivity gains are far more responsible for the declining share of manufacturing employment in the United States than trade agreements, which increase the quantity and quality of employment available in the market. These agreements also lower prices as Americans are given the freedom to import goods from areas where they can be made more cheaply.

“When you start to restrict trade, and you become more isolationist, you limit access to goods that are produced at a lesser price than could be produced domestically. You start to close yourself off from resources across the globe,” Trotier said.

What tariffs do

Since the late 1990s, we have experienced one of the most prosperous eras in world history, in which global income inequality fell for the first time in centuries due to growth in developing nations. From a foreign policy standpoint, the U.S. remains the most powerful country in the world; increased trade benefits a country’s influence. It also helps us protect allies. Modern countries are reliant on trade to survive, so access to U.S. markets is essential for many countries to resist Chinese economic coercion. To give up on free trade agreements would be to cede ground to the enemies of democracy on a global stage and give up on the progress of recent years.

“In [my AP] Comparative [Government] class, we talk about [our] tertiary economy [as well as] secondary economies [and] primary economies,” Trotier said. “Each economy has something to offer. I’m not looking at it [through] a utopian [lens]. You can’t have a service-based economy without a manufacturing economy.”

One of the main reasons for perceived economic weakness is high prices. The word inflation strikes fear into the hearts of Americans. That doesn’t mean that our government should start frantically pursuing change in pursuit of lower costs. In fact, it makes the protection of trade agreements even more important. Tariffs raise prices by making it harder for the U.S. to import cheap goods. In fact, disruptions in the global supply chain caused much of the inflation of the pandemic era, so limiting trade is unlikely to bring the benefits that protectionists hope for.

“We import stuff from [countries like] China because it’s cheaper to make there than here, so it’s going to be more expensive for people to buy [things] at the store [if imports fall]. That [would] be the biggest impact [of tariffs] — everything [would] become more expensive,” Hughes said.

If a tariff regime were to be instituted, it would hurt Parkway West students more than most. Metropolitan areas, of which St. Louis is one, are disproportionately reliant on the exports spurred by free trade to boost their economies. The comparative advantage enjoyed by the U.S. in “knowledge economy” sectors like communication technology mean that the benefits of free trade, perhaps rather controversially, are felt the most by workers with a college degree. In a district like Parkway where nearly nine-tenths of students pursue higher education, limitations on trade could dampen students’ future prospects.

“Districts like Parkway benefit from global trade and exchange, rather than competition,” Trotier said. “We are preparing students for service industries whether it’s health services or going into business. [Interest in] business classes here at Parkway West [has] skyrocketed in the last five [or] six years. We’re training students to go into service and sales and [to be] entrepreneurs. They’re not going to actually, physically produce things; they’re going to create the things that are going to be produced.”

The push to tear down a generation of economic consensus in the United States risks throwing the baby out with the bathwater. Policies such as free trade have contributed significantly to the prosperity of both the United States and the world as a whole, and shifting away puts those gains at risk. If it seeks to allow its citizens life, liberty and the pursuit of happiness, this nation must grant us the freedom to trade freely.