In the not-so-distant past, political leaders from both sides of the aisle in the United States held a general consensus on the benefits of free trade. Indeed, during their presidential campaigns in 2000, Al Gore and George W. Bush, despite their differences, at least agreed that fostering open markets was crucial for the nation’s prosperity and the well-being of its citizens. 

Fast forward to the present day and we find Joe Biden and Donald Trump endorsing staunchly protectionist policies, plunging the nation into a series of trade wars. The shift away from a once-broad consensus on free trade has been both dramatic and perplexing.

What happened?

Donald Trump’s election in 2016 marked a significant point in this transformation. Indeed, amid a changing political landscape, his assertive endorsement of protectionism proved crucial to his appeal as a candidate. During his presidency, he followed through by imposing tariffs and igniting trade wars with major partners, most notably China.

By the 2020 presidential election, in a complete reversal from two decades earlier, neither the Republicans or Democrats would take a stand for free trade. During the Biden administration, protectionist policies have continued to gain traction. 

Both parties’ evolution toward favoring protectionism and trade wars, while rapid in terms of policy implementation, was the result of a gradual change in political discourse and priorities.

This transformation in the political landscape serves as a critical backdrop to understanding why trade wars have become the norm and how the consequences of anti-free trade policy changes are deeply harmful, particularly for those on the lower rungs of the socioeconomic ladder.

The consequences of protectionism and trade wars

Protectionist policies, such as tariffs and trade barriers, are often touted as measures to protect domestic industries and jobs. 

However, trade wars have an ironic and devastating effect on those they are purported to assist the most as the primary burden of these conflicts falls upon the shoulders of those already worse off.

Here are some examples of the negative effects that are overlooked in the populist, protectionist rhetoric dominating American politics today:

1. Higher prices

Tariffs and trade restrictions drive up the cost of imported goods, leaving consumers to bear the brunt of the burden. Basic necessities, such as food, clothing, electronics, and household goods, become more expensive, making it harder for working-class families to make ends meet.

When prices surge due to trade restrictions, it is the most economically vulnerable who feel the pinch most acutely. The very policies aimed at safeguarding the livelihoods of working-class people end up further limiting their purchasing power and financial security.

Restricting trade also limits consumer choice by reducing the variety of goods available and increasing the prices of imported products. Yet again, those most in need of access to affordable goods are worst affected.

Moreover, trade wars have a devastating effect on small businesses, which often lack the resources to absorb the higher costs imposed by tariffs and trade restrictions. Many small businesses are an integral part of the working-class economy, and their struggles can directly affect the livelihoods of employees and communities.

2. Reduced economic growth

Protectionism stifles economic growth by limiting market access for businesses and hampering competition. This results in job losses and wage stagnation, disproportionately affecting the very people these policies claim to protect. 

Stagnation in economic growth exacerbates wage disparities and job insecurity, further marginalizing the working class. In this environment, where job prospects are limited and wage increases are scarce, the prospects for upward mobility diminish, perpetuating cycles of poverty and inequality.

3. Global supply chain disruptions

Trade wars disrupt global supply chains, causing shortages of critical goods, including medicines and essential medical equipment. This, in turn, has severe implications that hit the most vulnerable members of society the hardest. 

When access to essential healthcare items becomes scarce, it is often the poor and disadvantaged who suffer the most, as they are less equipped to navigate these challenges.

4. Diminished innovation

Open markets encourage innovation, as businesses strive to stay competitive in a global environment. By restricting trade, protectionist policies undermine the potential for technological advancements and economic progress. 

International trade is not a zero-sum game. Cooperation and diplomacy with trading partners is mutually beneficial. By engaging in trade wars, nations risk damaging relationships and undermining opportunities for collaborative solutions to global challenges.

The poor, who often stand to gain the most from advancements that improve access to healthcare, education, and economic opportunities, find themselves further disadvantaged in a closed, stagnant economy.

5. Retaliation and escalation

Trade wars are seldom one-sided affairs. When one nation imposes tariffs, others often respond in kind. This tit-for-tat cycle can lead to an escalating trade conflict that is ultimately detrimental to the interests of all parties involved.

Moreover, trade wars typically hit rural communities particularly hard. These areas often rely on agricultural exports and are vulnerable to retaliatory tariffs imposed by trading partners. The resulting decline in agricultural exports can lead to job losses and reduced economic activity, affecting rural residents who are already struggling with economic challenges.

However, the impact of retaliatory tariffs is by no means limited to the agricultural sector. Trade wars can disrupt export opportunities for a wide range of U.S. businesses by restricting their access to foreign markets and thus limiting further potential for job creation.

Conclusion

The shift away from free trade towards protectionism and trade wars has had profound implications for society, particularly for the economically disadvantaged. It is vital to recognize that the consequences of these policies are deeply impactful and predominantly hurt those who can least afford it. 

To address these challenges, America’s political leaders and indeed the voters who put them in office must reconsider their approach to international trade and reaffirm a commitment to free-trade policies that will spearhead a new era of prosperity, innovation, and opportunity for all.

Globalization, one of the primary forces behind improved living standards and the widespread availability of an abundance of consumer goods, is coming under increasing criticism from both the left and right. As such, the prospect of defending globalization will be an important theme at Students For Liberty’s upcoming LibertyCon International. 

2020 Libertarian Party candidate for president, Jo Jorgensen and distinguished professor of economics, history, English, and communication at the University of Illinois at Chicago, Deirdre McCloskey will take part in a panel on globalization, moderated by economist and author Bryan Caplan.

Held in Washington, D.C., on February 2-4, 2024, LibertyCon International offers an opportunity to engage with top experts, scholars, and entrepreneurs from a variety of fields while providing a platform for attendees to connect with others who are dedicated to advancing pro-liberty ideas and creating a freer future.

Click the button below to sign up for updates and secure your spot at this exciting event. We can’t wait to see you there!

This piece solely expresses the opinion of the author and not necessarily the organization as a whole. Students For Liberty is committed to facilitating a broad dialogue for liberty, representing a variety of opinions.