Conservatives in Congress have roundly condemned President Trump for calling for steep across-the-board steel and aluminum tariffs. Gary Cohn has resigned as his top economic adviser, in part, it seems, because he is so appalled by the move. And I get it. Trump’s tariffs are unlikely to do much good, as any benefit to domestic steel and aluminum producers is likely to be greatly outweighed by the harm to domestic steel and aluminum consumers. Moreover, there is a risk, albeit slight, that imposing tariffs could set off a beggar-thy-neighbor trade war. What’s frustrating, though, is that there was nothing inevitable about the fact that Trump would embrace poorly-targeted tariffs—the fault lies almost entirely with conservatives who’ve refused to give an inch to the party’s rising constituencies on trade policy, despite the fact that it’s an issue with enormous symbolic resonance.
Shortly after the presidential election, Stanley Greenberg and Nancy Zdunkewicz of the Democratic polling firm Democracy Corps offered a detailed analysis of the Trump coalition and its vulnerabilities. They found that it was significantly different from the coalition that had backed Romney in 2012. Though Trump lost ground among affluent, college-educated Republicans, he managed to bring a number of less-affluent independents and ex-Democrats into the fold, who were attracted to his deviations from Republican orthodoxy on entitlement spending and, importantly, his scathing denunciations of free trade. Whereas the GOP defectors were concentrated in states that were either so reliably Republican that Trump could afford to lose them or that were already hopelessly out of reach, the GOP-skeptical Trump voters were concentrated in Rust Belt swing states, which proved fortuitous.
Republicans in the Trump era have thus faced a challenge: To preserve and expand their majorities, they’d have to consolidate support among old Republicans, who are mostly wary of ideological departures, while folding Rust Belt skeptics into the GOP coalition. Foolishly, Republicans in Congress have devoted all of their energy to advancing a preexisting ideological agenda, with mixed success, while utterly ignoring GOP-skeptical Trump voters and others who might have been open to joining their ranks. The predictable result is that Republicans are on the verge of losing the March 13 special election in western Pennsylvania, in a district Trump won by a wide margin, and their chances of holding on to the House are diminishing by the day. At this point, the lion’s share of GOP-skeptical Trump voters might already be out of reach for congressional Republicans.
Enter Trump. Keenly aware that protectionism was a central part of his appeal in the Rust Belt, his decision to make protective tariffs the centerpiece of his economic agenda is best understood as a way—a desperate, characteristically shambolic way—to seize the initiative. If his ostensible allies in Congress are unwilling to adhere to his heterodox formula, so be it. He will take the lead. If Trump can’t reinvent the Republican Party as a vehicle for his economic nationalism, he can go back to waging war on its elites.
There was another way forward. At the start of the Trump presidency, House Speaker Paul Ryan devised a strategy that had the potential to reconcile the president’s economic nationalism with his devotion to free trade. He proposed scrapping the corporate income tax altogether and replacing it with a destination-based cash-flow tax (also known as the “border-adjusted tax,” or BAT) that promised to make America the world’s most attractive place to do business. Though the BAT posed a number of complications, and though it is very unlikely it would have raised as much revenue as Ryan had suggested, it had the potential to greatly strengthen the U.S. tradable sector, the central objective of economic nationalism.
Yet as Joseph Lawler and David M. Drucker reported in the Washington Examiner, the BAT died at the hands of retail interests and conservative advocacy groups financed by retail interests, which insisted that it would harm consumers—a highly misleading claim given that the advent of border adjustment would lead to a stronger U.S. dollar. In the end, the intransigence of the House Freedom Caucus killed a measure that might have scratched the president’s protectionist itch without actually hampering global trade.
And that’s a symptom of a larger disease: Though Trump’s unlikely victory offered Republican lawmakers an opportunity to broaden their coalition, and to advance ideas that could unite the party’s nationalist and libertarian wings, their cravenness in the face of even the slightest corporate resistance has been their undoing.
So though I won’t applaud the president for going rogue on tariffs, I can hardly blame him. He’s evidently not willing to go down with the ship.
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