Throughout his political career, Donald Trump has positioned himself as an economic nationalist who believes that free trade has hurt the United States more than it has benefited it. The disappearance of manufacturing jobs, the stagnation and collapse of household incomes, and even the loss of national pride and identity can partly be attributed, according to Trump, to a ruinous policy of open trade and open borders. Trump managed to garner considerable electoral support by promising to rescind international trade agreements that allegedly sacrificed American economic interests in the name of global economic integration.
As Trump began the process of renegotiating NAFTA, he told a group of supporters that a satisfactory agreement may not be reached with Canada and Mexico, and that NAFTA may be terminated as a result. If NAFTA survives these negotiations, the new version of the trade agreement that emerges will likely tighten access to American markets. After dealing with NAFTA, Trump will likely seek to restrict trade with China and other countries by either levying tariffs on imported goods, securing “import relief” for certain industries under section 201 of the World Trade Organization charter, or withdrawing the United States from the WTO altogether.
While these protectionist measures are popular among Trump’s electoral base, they are anathema to America’s political, corporate, and cultural elite. This is evident in the mainstream media, where journalists, pundits, and economists extol the benefits of free trade while excoriating Trump for setting the United States on a dangerous path towards economic isolation. Meanwhile, congressional Republicans and even some Democrats prepare to resist any effort by Trump to block trade.
In order to successfully carry out his protectionist agenda, Trump must override the elite consensus on free trade. This consensus arose in the aftermath of World War II, when Washington officials unanimously agreed that free trade would create the conditions for lasting peace and economic prosperity. Prior to this time, however, the American political establishment was divided on the issue of free trade, with Republicans calling for higher tariffs and Democrats calling for the lowering or elimination of import duties. Supporting Republicans in their campaign for protectionism were economists, businessmen, and journalists of high social standing and considerable political influence.
When Donald Trump speaks about the need to keep foreign goods out of the United States, he is upholding traditional Republican positions on trade. In fact, many of Trump’s ideas on trade can be directly traced to a nineteenth century economist with ties to the Republican party: Friedrich List.
Born in 1789 in Germany, List dedicated much of his life to challenging the “classical” theory of trade put forward by Adam Smith in The Wealth of Nations. Whereas Smith and his acolytes saw free international trade as a boon to humanity in its totality, List saw it as a means by which some nations assume dominance over other nations. As evidence for his views, List pointed to the fact that free trade in Europe had led to the economic subordination of Germany and France to Britain. By exporting large quantities of cheap manufactured goods to Germany and France, List argued, Britain had hindered economic progress in these continental nations, thus maintaining its economic superiority.
In his book The National System of Political Economy, List presented his own theory of trade that took into consideration “the existing interests and the individual circumstances of nations.” One of the main tenets of List’s theory is that manufacturing is important to a nation’s economic, social, and cultural well-being; it is only by developing a robust manufacturing sector that a nation can accumulate capital, fully exploit its natural and human resources, and increase its scientific and artistic output. It is impossible, however, for a nation to cultivate a strong manufacturing sector under conditions of free trade. This is because free trade leads to a fall in the prices of manufactured goods, which squeezes the profits of newly established manufacturers, many of whom face low levels of productivity and high costs of production.
Not content to merely write about the dangers of free trade, List sought to change German trade policy through direct political participation, serving as secretary of a merchants’ association and then as a member of parliament. As his reputation as an anti-trade crusader grew, List began to be seen as a threat by powerful elements of German society, and was eventually charged with sedition. After living in exile for a few years, List travelled to the United States in 1825 and soon settled in the city of Reading, Pennsylvania.
Resuming his political activities in his adoptive home, List quickly joined the Pennsylvania Society for the Encouragement of Manufactures, writing pro-tariff letters and screeds on behalf of this organization. Some of these letters reached Richard Rush, the Secretary of the Treasury under Whig-Republican President John Quincy Adams. Encouraged by List, Rush called on Congress to substantially raise tariffs which resulted in the passage of the 1828 “tariff of abominations.” Although this new tariff satisfied the Pennsylvania Society, it aggravated Americans in the South who had to pay higher prices for various goods. In 1829, John Quincy Adams was defeated in a national election by Democrat Andrew Jackson, who proceeded to lower tariffs from 50 percent to less than 20 percent.
Free trade reigned in the decades following the election of Andrew Jackson, as successive Democratic and Whig presidents made no serious effort to raise tariffs. In 1849, a prominent economist and Whig named Henry C. Carey started writing articles for the New York Tribune blaming America’s ever-recurring recessions on free trade policies, and imploring Congress to enact higher tariffs. Many of Carey’s arguments in favor of protectionism followed the same line of reasoning as Friedrich List. Although he was not taken seriously by academic economists, Carey earned a considerable following among businessmen, some of whom took to calling him the “Ajax of Protection.” After the dissolution of the Whig Party in 1853 and the formation of the new Republican Party in 1854, Carey decided to use his capacities as a shrewd political actor to push the Republican Party platform toward protectionism.
As Carey consorted with members of the fledgling Republican Party, he managed to convince many of them of the necessity of high tariffs. At some point, Carey befriended a Republican Congressman from Vermont named Justin Smith Morrill, with whom he helped author a new tariff bill. Two days after the passage of the Morrill tariff bill, Abraham Lincoln was elected president under the Republican banner. On August 5, 1861, Lincoln signed into law a second tariff bill put forward by Morrill. Throughout his presidency, Lincoln remained committed to high tariffs, not only to protect American industries but also to finance the war against the Confederacy. Lincoln’s Republican Party faithfully carried out the policy prescriptions of Friedrich List and Henry C. Carey until the end of World War II.
This trend abruptly ended in 1946 when, due to public weariness of tariffs, Republicans fully abandoned the protectionist agenda of their predecessors. The nationalist economic ideas of List and Carey were forgotten. It seems that Donald Trump, however, is trying to revive these ideas and continue the protectionist legacy of his party.
Elia Rasky is a doctoral candidate of political science at York University, Toronto. His studies generally focus on political economy and the history of economic thought. His work also appears in Our Times, a Canadian labour magazine.