Republicans have themselves to blame for Donald Trump’s trade war
In the week since Donald Trump rocked the global order by announcing tariffs on steel and aluminium imports, the world – and his White House – have been scrambling to react.
The EU has suggested sinking down to America’s level by retaliating with its own tariffs on US cars, clothes, and whisky, while China is also threatening a response. Meanwhile, Trump’s chief economic adviser Gary Cohn, one of the fiercest free trade advocates in the administration, resigned on Tuesday – a strong sign that the ideological isolationists in the White House are winning.
The wildcard in all this chaos is vice president Mike Pence – the last hope for market-driven Republicans, and a man who is notoriously good at playing both sides.
Read more: Trump slaps tariffs on steel and aluminium but leaves get-out clause
At a speech in Iowa this week, Pence publicly praised Trump’s recent antics: “whether it’s in renegotiating Nafta, or protecting our steel and aluminum industries, President Trump is always going to put American workers… first.”
Of course, Pence knows as well as any pro-business Republican that starting a trade war is not putting American workers first.
For a start, the US steel industry employees around 142,000 people. In contrast, 6.5m Americans work in industries that use steel, and would suffer from higher prices (either due to import tariffs or being forced to use costly US steel).
In other words, for every steel worker who might benefit, 42 manufacturing workers stand to lose. And while Trump might argue that tariffs will lead to new jobs in the steel industry, the risks of higher job losses elsewhere are immense.
This is all before we even consider the effect of retaliatory tariffs on US products. Suddenly, anyone working in America’s automotive, manufacturing, or food and drink sectors is on perilous ground. Those people are workers too.
And finally, workers need to buy things. Free trade advocates understand what Trump doesn’t: if a different country can export goods at lower prices than the domestic rate, American consumers benefit from cheaper products.
Pence knows all this. And while he personally may not be as ideologically pro-market as others in his party (his brand of Republicanism is more religious conservatism than market liberalism), he nonetheless understands how politics works.
The 2018 midterm elections are only eight months away, with several dozen precarious Republican seats up for grabs in the House. Watch out for races in Pennsylvania, Michigan, and Wisconsin – states that flipped for Trump in 2016, thanks in part to his siren song to blue-collar workers about protecting traditional industrial jobs.
How are voters in those areas going to feel if their factories close thanks to a spiralling trade war started by the reckless reality star who promised to be their saviour?
The Democrats already have a raft of advantages going into the midterms, from the weekly revelations in the ongoing Russia probe, to the scuffles over Obamacare last year that enable them to accuse Republicans of “taking your healthcare away”.
Republicans have been counting on Trump’s landmark tax reform to counter this – the US economy has been growing at a strong rate, and big companies like Apple and Walmart responded to the tax cuts by offering bonuses to their workers and announcing new investment.
That’s a powerful campaign message – “look how much extra money Trump has put in your pocket” – but it falls through completely if you lose your job because China and Germany stopped buying your company’s products, thanks to the President’s compulsive tweeting.
Trump might not care about that, but the Republicans on the Hill whose seats are at risk certainly do. Their main reason for standing by their President despite his Twitter rampages, diplomatic embarrassments, and economic illiteracy is the support his fanbase lends to their own political prospects.
Put that in jeopardy with a trade war, and you have a squad of electorally vulnerable Republicans who will quickly find their patience with the President evaporating. Plus if the Republicans lose their House majority in the midterms, they wave goodbye to any chance of pushing through their agenda during the rest of Trump’s term.
This is why Pence, at the same time as giving speeches supporting Trump, is reportedly working behind the scenes as a liaison for pro-trade Republicans. While he would never publicly go against the President, he needs his party to hold the House as much as any congressman up for reelection, and his lobbying may have been the spur behind Trump softening his stance on Wednesday, with potential tariff exemptions for Canada and Mexico.
The irony is that Trump has been promising “America First” protectionism since he launched his campaign.
Pence and the rest of the Republican party knew what they were getting themselves into – what did they expect when they backed a proudly anti-expert candidate whose default setting for foreign policy is “it’s not fair”, and who promised his base economic miracles that no politician has any hope of fulfilling?
If Trump’s tariffs do start a trade war, it’s a trade war they should have seen coming. For their own sake as much as for that of the global economy, Republicans had better hope they can avert it.
Read more: The rest of the world must fill the void left by Trump’s protectionism