Trade Isn’t Great Retail Politics for Either Party

Since the United States’ trade imbalance flipped sharply negative in the mid-1970s and nose-dived in the Ronald Reagan years, both the Democratic and Republican parties have sought to weaponize trade as a political wedge issue. That approach has not worked for either of them. As a result, trade is unlikely to be a major theme in the 2024 election cycle.

Broadly, Americans are now less supportive of the role of trade in the U.S. economy. But the picture gets muddled as you dig into those sentiments, with a bare majority believing trade does more good than harm. Support for trade has largely recovered from the historic low of the 2016 campaign levels, but a sharp partisan divide that reverses decades of preconceptions reveals Democrats are now more favorable to trade’s impacts than Republicans by a margin of nearly 2:1. Yet trade as an issue virtually never breaks into the top-ten list of voter concerns. Certainly, the term trade is often subsumed under broader economic concerns; voters rightly include trade neuralgia with macro-policy worries such as inflation and interest rates.

When, after fourteen futile years of negotiations, the World Trade Organization (WTO) Doha Round failed in 2015, financial markets and politicians shrugged off the first postwar repudiation of trade expansion. Elites continued to tell ordinary Americans, in effect, to “shut up and eat your Ricardo; it’s good for you.” More trade expansion was still better, even though the American middle class had shrunk by 10 percent between 1971 and 2023.  

To what extent Americans are better or worse off than they were in previous decades is elusive. But the fact that gains are unevenly distributed and geographic inequality is a real factor feeding populism and disenchantment with globalization is beyond debate.

Simply put, trade overpromised and underperformed, with the result that both populist politicians and elites are now more accepting of the politics of protectionism. Just as trade liberalization was oversold, the entire political spectrum now seems willing to underrate the risks of protectionism and to blame trade for changes they actually know were wrought by technology. The price of such collective misjudgments is likely to be paid in reduced economic dynamism across both goods and services sectors.

Allowing that trade policy is not, and has not been, top of voters’ minds in any recent national elections, that suggests a politically safe space for a retelling of how classical trade theory gains contribute to a better life for American voters. A failure of political will and imagination challenges that idea.

Republicans now openly repudiate market opening as an element of fealty to Donald Trump’s America First vision of mercantilism where tariffs offset imbalances and investment and currency policies are reshaped to produce asymmetric advantages for U.S. goods and services.

President Joe Biden’s foreign policy for the middle class is elusive at best—and, at worst, part of the failed narrative whereby more than half of Americans believe the United States is in recession (it is not) and that the stock market is falling (it is setting records). Among the major differences in those two approaches is the fact that Democratic trade activism targets problem trading partners and mostly spares allies, while Trump protectionism is indifferent to underlying relations: all trade imbalances provoke the same mercantilist antibodies.

All to say that neither party has a story to tell about how trade contributes to a stronger and more secure United States. The voters’ lack of confidence in the role of the external sector suggests they would be unlikely to believe the parties if they did.

The good news? The winner gets a blank piece of paper—uncluttered by political expectations—on which to describe a way forward for a more inclusive and equitable public bargain on trade. Crafting policies and a realistic narrative requires making trade a nonoptional component of American security.

Kevin G. Nealer is principal of the Scowcroft Group and an advisor to the CFR RealEcon initiative.