Trump Can't Have It Both Ways

The president will have to choose between restricting trade and limiting low-skill immigration.

Trump holds a meeting on steel and aluminum tariffs at the White House on March 1, 2018. (Kevin Lamarque / Reuters)

There is a contradiction at the heart of Trumpism’s embrace of protectionism and restrictionism. President Donald Trump often portrays international trade less as a non-zero-sum form of cooperation and more as a battle to the death, in which wily foreigners have for years been winning at the expense of ordinary Americans, thanks in large part to the treacherousness of U.S. elites. His call for steep tariffs on steel and aluminum imports is very much in keeping with his mercantilist instincts. At the same time, the president advocates more stringent limits on low-skill immigration.

You might think these policies complement each other. And as a matter of cultural sensibilities, there’s no denying that they tend to go together. The trouble is that offshoring is essential to making limits on low-skill immigration tolerable for large employers, at least for the foreseeable future. Just as you can’t have your cake and eat it too, you can’t slam the door shut to low-skill labor while also slamming it shut to imports of the goods and services an abundant supply of low-skill labor makes possible.

The president and his allies are thus faced with a decision about the character of their economic nationalism. If their chief objective is to wall the U.S. off from global trade, they’ll have little choice but to accept low-skill immigration as part of the bargain. But if they see a more selective, skills-based immigration system as essential to their vision of the American future, they must embrace the global division of labor.

The kind of people who celebrate free trade tend to be the kind of people who have a taste for change, which makes them more favorably disposed towards the free movement of people across borders. Similarly, on the other side of the political fence, immigration skeptics are often motivated by a sense of nostalgia, which inclines them to oppose offshoring, automation, and other forces that threaten to change the look and feel of society.

In practice, though, offshoring enables large U.S. employers to substitute low-skill workers abroad for low-skill workers at home. This is in stark contrast to the first decades of the 20th century, when the rise of American industry was fueled in no small part by low-skill immigrant labor. Now, however, it’s possible to contract out the most labor-intensive parts of production to firms and workers based in countries where low-skill labor is cheap and labor standards are lax, or to adopt capital-intensive business models at home that use low-skill labor sparingly if at all. The result is that tradable-sector employment in the U.S. is increasingly skewed towards high-skill workers, who work in tandem with low-skill labor overseas. Meanwhile, low-skill workers in the U.S. typically find themselves employed by smaller, lower-productivity firms that pay lower wages, with business models that likely wouldn’t survive years of serious, sustained wage gains.

Inevitably, this changing economic landscape has influenced the politics of low-skill immigration. In Trading Barriers, the UCLA political scientist Margaret Peters finds that as barriers to trade have fallen, barriers to low-skill immigration have risen. While others have argued that restrictionism has gained ground because nativism is rising, or because the expansion of the welfare state has intensified concerns about the fiscal impact of low-skill immigration, Peters offers a novel and compelling explanation: Major corporations have lost their appetite for using their considerable resources to fight the restrictionist tide.

To be sure, in the age of “woke capital,” there are plenty of corporations that celebrate immigration-driven cultural change and diversity, and of course corporate America still lobbies aggressively for openness to high-skill immigration. Low-skill immigration, however, is an entirely different story. Though it remains essential to sustaining the low-skill workforce in the U.S., as rising educational attainment and falling birthrates would otherwise cause it to shrink over time, the fact that firms can simply import labor-intensive intermediate inputs rather than produce them in-house has made the availability of low-skill labor a less urgent, if not an entirely superfluous, concern.

And as corporate demand for low-skill labor has fallen, corporate lobbying for low-skill immigration has fallen off. This in turn has changed the character of immigration advocacy, moving it away from the priorities of low-wage employers, such as the creation and expansion of guest-worker programs, towards a greater emphasis on the rights of immigrants to reunite with their family members and, in intellectual circles, certainly, humanitarian calls for low-skill immigration as a vehicle for the uplift of the global poor. (Peters, for instance, concludes her book by offering a moral defense of open borders.) Mind you, economic self-interest still plays a role in the coalition for low-skill immigration: Affluent professionals, for example, greatly benefit from an abundance of low-skill immigrant labor, as it makes it cheaper for them to outsource household production, while they’re potentially disadvantaged by the arrival of high-skill immigrants capable of competing with them for high-wage, high-status jobs. But such arguments increasingly play second fiddle to more emotionally resonant appeals centered on the moral worthiness of immigrants themselves.

Protectionism, however, has the potential to change the political equation. Whereas import competition has lessened corporate America’s dependence on low-skill immigration, protectionism would almost surely increase it.

High tariffs offer a lifeline to low-skill, labor-intensive business models that couldn’t otherwise withstand import competition. Moreover, tariff protection might delay the adoption of labor-saving technologies, for the simple reason that while import competition forces firms to seek productivity gains, its absence gives them breathing room. Under these favorable circumstances, the main threat to profitability would be rising wages for low-skill workers, which can be contained—and here we come full circle—by low-skill immigration. It stands to reason that industries shielded from import competition would be more inclined to lobby in favor of low-skill immigration than those that are exposed to it. We see a hint of this dynamic in the notoriously inefficient construction sector, which has long been heavily reliant on low-skill immigrant labor. Things would undoubtedly be different if U.S. consumers could import buildings from abroad as easily as we import smartphones, but that’s still a long way off.

So is this what Trump wants: to embrace protectionism, and to supercharge corporate America’s appetite for low-skill labor? There is, I’ll admit, a certain logic to this position. If the main objective of economic nationalism is to prevent the loss of existing low-wage jobs, increasing low-skill immigration is a decent way to do it. At high enough levels of it, no one would even bother to work on self-driving cars and delivery drones, as chauffeurs and bicycle messengers could be had at cut-rate prices. Indeed, in the absence of low-skill immigration, many of today’s low-wage jobs—in agriculture, garment manufacturing, meatpacking, and retail—would already be done by machines or by workers overseas. Perhaps the pro-tariff wing of the Trump administration dreams of a future in which a dwindling number of low-skill U.S. citizens serve as the superintendents of vast armies of low-skill guest-workers, who’d do work with their hands that is now done by machines, or in the teeming factories of the developing world. It’s an intriguingly inegalitarian vision that scratches the same itch as the liberal imperialism of yesteryear.

But I’m skeptical that this vision would have much purchase among America’s economic nationalists. I suspect that the real driving force behind economic nationalism isn’t a desire to preserve today’s low-wage jobs in aspic, but rather to ensure high and rising living standards for all Americans, and to prevent the emergence of a new underclass. And if that’s so, economic nationalists have a vested interest in keeping our country open to trade.