Vice Presidential candidate Sen. JD Vance (R-Ohio) joining the Trump ticket confirms the Republican Party’s turn toward economic protectionism and skepticism toward unfettered globalization.
Former President Trump’s distaste for free trade agreements and global supply chains shook the policy consensus during his first term, narrowing the gap between the GOP and Democrats on key industrial issues.
Vance, who was elected to the Senate in 2022, has shown distaste for some of his party’s longstanding policy priorities and expressed a sense of economic populism that was a hallmark of the first Trump administration. An Ohio senator has blasted a bipartisan deal on free trade deals and the outsourcing of labor-intensive heavy industries as a “stupid Washington Consensus.”
Speaking at the Munich Security Conference in Germany earlier this year, Vance criticized economic policies that had resulted in “deindustrialisation”.
“Look at the number of people working in manufacturing in Germany 10 years ago now,” Vance told a German audience in February. “Look at the critical raw materials that are being produced in Germany now 10 years ago – the energy dependence of 10 or 20 years ago. Industrialization has to stop.
Vance continues to air his disdain for the bipartisan agenda that has shifted much of global manufacturing to Asia in recent decades, which he sees as a central factor in the decline of the American industrial base and the social institutions built upon it in places like his home. Ohio State.
“The crazy thing is – the free traders never agreed that it was 2024 – when we made the case in the ’70s and ’80s that we should build China’s industrial economy, we did it knowing that it would harm America’s middle class,” he said in May. said during a speech at the Quincy Institute last month.
Vance has praised Federal Trade Commission Chairman Lina Khan for her antitrust enforcement, saying she’s doing a “beautiful job” despite what many in the business world have charged against her. He acknowledged that his stance on Khan sets him apart from the majority in his party.
Vance’s distrust of globalized value chains echoes Trump’s economic populism.
While much of Trump’s second-term economic agenda remains hidden, there may be some highly protectionist elements if the former president manages to win back the White House.
Trump has imposed a general tariff of 10 percent on imported goods, 60 percent or more on imports from China in particular and mass deportations of immigrants as part of an immigration crackdown.
The economic consequences of such flagship programs, as well as the reception of businesses and the lobbies that represent them in Washington, are likely to be deeply mixed, as the private sector is wary of losing migrant workers and access to international markets. As a result of retaliatory actions by other countries.
Despite opposition, protectionism has managed to gain serious political traction in several forms on the trade agenda during Trump’s first term, with the former president opening a trade war with China and renegotiating the seminal NAFTA trade deal that included labor protections. US-Mexico-Canada Agreement (USMCA).
Trump also pulled out of the massive Trans-Pacific Partnership (TPP) trade deal with several Pacific Rim countries upon taking office. All this derailed the multilateral free trade consensus that had prevailed since the post-war period and was actually accelerated by the enactment of NAFTA in the 1990s, with the conclusion and establishment of the Uruguay Round General Agreement on Tariffs and Trade. World Trade Organization (WTO).
While Trump has bulldozed several international precedents while reshaping U.S. trade relations, experts warn that the current regulatory environment, recently restored by the Supreme Court in Lober Pride Enterprises v. Raimondo, is not conducive to unilateral changes. From management.
In its Lober Pride decision, the Supreme Court overturned the so-called “Chevron Deference,” which extends to federal agencies the power to determine the nature and scope of legislative provisions as they see fit.
The court ruled that the statute “requires courts to use their independent judgment to determine whether an agency has acted within its statutory authority, and courts will not defer to an agency’s interpretation of a statute because a statute is ambiguous.”
“This [puts] A check on the executive,” Axel Merck, investor and founder of Merck Investments, told The Hill. “When you take power away from the executive state, it definitely works for both parties.”
Trump’s protectionism breaks from decades of GOP support for free trade and brings the party closer to Democrats, who have largely supported much of the former president’s trade agenda during the current administration.
Instead of trying to revive the TPP or strip the USMCA in the direction of its NAFTA predecessor, the Biden administration has allowed these efforts to stall while further distancing itself from the WTO and allowing greater exercise of national sovereignty in the world of trade. .
The Biden administration has not pursued additional large-scale trade deals that would make foreign market access a top priority.
In March, U.S. Trade Representative Catherine Doi oversaw a report change in the National Trade Assessment Report that dropped the names of trade barriers long favored by U.S. companies.
Domestically, the Biden administration has launched some major new industry initiatives in several major pieces of legislation, including the CHIPs and Science Act, which aims to revamp the manufacturing of microprocessors, as well as a major Infrastructure Investment Act and the Climate Act. Technical Law.
Despite Trump’s economic nationalism on trade and industrial production, now amplified by his running mate Vance, many fundamental aspects of their economic policy are more consistent with previous GOP administrations.
Business and personal tax cuts, central to Republican policymaking for more than a generation, will further increase the national deficit.
Trump wants to extend his signature 2017 tax cuts, which cut many individual rates and cut the corporate rate from 35 percent to 21 percent. The corporate rate is reduced to 15 percent and floated.
Despite further changes to corporate rates, expiring personal and business deductions could add up to $4.6 trillion to the national deficit, according to the Congressional Budget Office. That’s after GDP hit a new plateau of about 120 percent following the pandemic.
The International Monetary Fund has warned that the United States must start a program to reduce the deficit within the next 10 years.
