There is a much greater connection between foreign policy and trade policy than some may understand. It is not unusual for trade policy to be used in the service of foreign policy.
President Trump showed this when he tweeted: “I explained to the President of China that a trade deal with the U.S. will be far better for them if they solve the North Korean problem!”
President Trump has also stated, “If they’re helping me with North Korea, I can look at trade a little bit differently, at least for a period of time. And that’s what I’ve been doing. And after Australia was exempted from steel and aluminum tariffs, Australia’s Minister for Trade and Investment denied any relationship between the exemption and Australia’s security agreement with the U.S., while Australia’s Foreign Affairs Minister Julie Bishop was quoted as saying, “There is no further security arrangement, there was no reciprocal arrangements as a result of the tariff exemption.”
That’s an awful lot of denials and coincidences.
President Trump is certainly not the first President to use trade policy in the service of foreign policy and this is not a Republican or Democratic issue. Both parties have subordinated American jobs to “winning” support for Capitalism. As author Alfred Eckes outlines in his book, “Opening America’s Market: Foreign Trade Policy Since 1776,” under every American president after World War II, trade agreements were used as foreign-policy tools.
While trade agreements were used to win support in the war against Communism, foreign markets largely remained closed while America threw open its doors complete with a blinking “welcome” sign that would have made even the Vegas strip blush. This was done through unequal tariffs, quotas and other trade mechanisms. These highly unfavorable trade terms put American manufacturing at a significant disadvantage. Companies responded by closing manufacturing in the U.S. and opening operations in foreign countries. Our trade policy in effect helped to push American companies out the door.
To add insult to injury, there was always the requisite but highly inauthentic Congressional show of indignation and hand wringing. But our leaders offered only crumbs to offset the loss in a self-serving manner to soften the political fallout rather than to meaningfully offset the pain inflicted on American jobs. These so-called trade adjustment provisions were, however, more for political show, political CYA than meaningful support for American manufacturing. Why have we had such a miserable trading record? One key reason is because trade policy became the tool of foreign policy, resulting in a mass exodus of companies, largely of our own doing.
More recently a new Communist power has come to the fore, China. Prior to President Trump, President Obama’s administration was negotiating the Trans Pacific Partnership, or TPP. The map below shows the countries that were to be a party to the TPP conveniently encircling China.
After analyzing the countries that were to be involved in the Trans Pacific Partnership in relation to China, it is not unreasonable to speculate to that President Obama and former Secretary of State Hillary Clinton were attempting to use the TPP at least partially to contain China’s ambitions within the Asia-Pacific region.
If you still doubt the influence of foreign policy on trade policy, then consider the following question: Have you ever been able to explain why U.S. automakers had such limited access to Japan’s auto market for years while Japanese automakers seemed to have unlimited access to our market? Or consider this: Why are our tariffs often significantly lower than the tariffs of other countries we trade with? Were our negotiators that much worse than the negotiators of other countries? No. A primary reason why our trade agreements since WWII have been so unfavorable is because U.S. Presidents from both political parties have used trade agreements as tools in foreign diplomacy.
We can debate the merits of using trade agreements to achieve foreign-policy objectives.
What cannot be debated is that it has been done. What remains to be seen is just how far President Trump and his Secretary of State Designee Mike Pompeo will go in using trade policy in the service of foreign policy.
It will be a balancing act between his foreign policy objectives and the trade promises he made to his base. Go too far in using trade policy in the advancement of foreign policy and he will erode support among that portion of his base which responded to his “America First” message.
It seems the president has a choice to make, which will be first: Foreign policy or trade policy and jobs?