OPINION:
Trade with China and tariffs will be central in the 2024 presidential campaign, and the destructive trade policies of President Biden and former President Donald Trump will invite Americans into a perilous fixation.
Voters are like armies — they march on their stomachs — and the economy is getting better.
The promised recession will likely prove mild or never materialize. The consensus of forecasters is for modestly slower growth in the final quarter of this year and early next year. The economy should take off just in time for Mr. Biden’s campaign.
Inflation won’t fall to 2% quickly, but wages are again outrunning price increases.
Americans should start feeling more prosperous soon.
Interest rates will remain high and be a point of contention. But the Republican Party won’t be able to make much of a case that it has an answer to those because the most important factor is the growing borrowing requirements and debt service of the federal government.
The budget deficit is soaring to alarming levels because Washington has had little fiscal discipline since the global financial crisis and accompanying recession.
The national debt has increased from 37% of gross domestic product in 2007 to nearly 100% by the beginning of next year because former President Barack Obama, Mr. Trump and Mr. Biden in succession borrowed to bail out the banks and recover from the Great Recession, cut taxes and cope with COVID-19, and now to boost manufacturing, research and development, and unions.
The CHIPS and Science Act had broad bipartisan support, and those elements of the Inflation Reduction Act aimed at promoting green industries and motor vehicles will be tough to campaign against — at least successfully.
What part of “Bidenomics” will Mr. Trump or another GOP nominee rail against? Mr. Biden’s conditioning federal aid to industry to supporting unions and providing employee child care?
With the Upper Midwest and suburban women as points where the battle for the White House will be joined, such a posture would just about guarantee Mr. Biden a second term.
I doubt anyone would view renewed Republican promises to cut taxes as credible avenues to reduce deficits.
If Republicans have a plan to curtail federal spending that they can sell in a campaign to voters, it’s as much of a mystery as the location of the Lost Ark of the Covenant.
Inflation at 3% to 4% may be unsettling, but the GOP will need to hammer China and trade for stealing jobs.
Mr. Trump is not the fool the mainstream media would have us believe. His ascent owed much to attacking political correctness — now rechristened “wokeism” — and immigrants and hawking protectionism.
His brain trust is cooking up schemes to raise tariffs — not just on China, but across the board by 10%. Other GOP hopefuls are falling in line.
Even former South Carolina Gov. Nikki Haley, who has demonstrated courage in debating foreign policy, abortion and Social Security, advocates dramatically boosting tariffs on China.
During the Great Depression, Congress raised tariffs against imports from all nations by 20 points, taking the average rate to a historic 40%.
That just made a bad situation worse. Global trade contracted by about two-thirds, and export industries based on fair exchange among nations lost jobs.
Consider whether blocking imports of clothing from Bangladesh to recreate factory jobs would be worth losing foreign sales of Microsoft Windows and machinery.
The central point is that not all trade is bad, but both Mr. Biden and Mr. Trump behave as if it is.
Mr. Trump imposed tariffs on steel and aluminum indiscriminately instead of focusing on the dozen or so bad actors who do the most subsidizing.
Mr. Biden eschews all new trade agreements. His industrial policies, by imposing domestic content requirements and subsidies, pirate manufacturing from Europe and India as surely as those rescue it from Chinese mercantilism. Those industrial policies are raising barriers to trade just as virulent, even if less visible, as tariffs.
Slowing growth abroad inevitably will slow U.S. exports of high-end semiconductor designs, artificial intelligence software and movies — to name a few.
We can maintain full employment by revving up our factories, but it’s hardly worth trading export jobs in high-tech industries for manufacturing assembly jobs.
Imposing yet more barriers on U.S. imports across the board would illicit retaliation from friend and foe alike, trade would contract as it did in the Great Depression, and Americans would be poorer.
Economic efficiency would immediately fall. Writing software pays better than stitching garments because it creates more value.
More importantly, Americans would lose economies of scale in high-tech industries. Less trade spells fewer profits and less R&D into artificial intelligence, new drugs and battery technology.
It would be better to impose across-the-board tariffs just on China and forge new trade agreements with allies.
All ages have Luddites. These days, they script industrial policy at the White House and tariff schemes for the Trump campaign.
• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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