It is appalling how misleading is the mainstream press coverage of trade issues. Virtually all mainstream writers have imbibed the conventional wisdom that there is a simple divide between something called “free trade” and something disparaged as “protectionism.” Free trade, good; protectionism, bad.
But how do you proceed when another country is clearly protecting its home markets and its exports—by subsidizing their manufacture and selling them below the cost of production—at the expense of competitors who really do practice free trade by letting the free market set prices?
Do you just roll over and lose your industry? Trade law and common sense says you retaliate, to level the playing field.
Somehow, however, that distinction has escaped The New York Times, which thinks (along with most economists) that resisting someone else’s flagrant protectionism is itself protectionist.
Here is the offending article from Tuesday’s Times. I’ve bolded the misleading or mistaken use of language:
WASHINGTON — President Trump slapped steep tariffs on imports of washing machines and solar energy cells and panels on Monday, the first major step by the administration to erect the kind of trade barriers Mr. Trump has frequently said are necessary to protect manufacturers in the United States. …
White House advisers warned that additional trade measures related to steel, aluminum and other products from China could be coming, a signal that Mr. Trump is ratcheting up the protectionist policies he has long espoused as part of his “America First” approach. …
Protectionism was a defining theme of the populist presidential campaign in which Mr. Trump gleefully rebuffed the longstanding Republican embrace of free and open markets.
Now this, to put it politely, is hogwash. In fact, Robert Lighthizer, Trump’s chief trade negotiator, is a veteran of the Reagan administration, the last time the U.S. government was semi-serious about resisting other nations’ protectionism. If they had not done so, Japanese protectionism would have completely taken over U.S. manufacture of semiconductors and steel.
Reagan, of course, was a passionate believer in free markets. But Reagan, unlike the Times, appreciated that protection by other nations is far from a free market.