Reagan's Trade Legacy: A Misguided Attempt to Rebrand His Record

Strategic Insights -

Ronald Reagan was a vocal advocate of free trade, firmly opposing protectionism and trade wars, unlike his successor, President Trump. During the recent World Series, the government of Ontario aired an advertisement using Reagan's remarks from a 1982 radio address, criticizing protectionism and trade wars. Trump responded by cutting off trade talks with Canada and threatening a 10 percent duty on Canadian products, a move that may have been one of the most expensive in history.

In contrast to Trump's isolationist stance, Reagan's approach to trade policy was characterized by the three P's: principle, pragmatism, and politics. On principle, Reagan was a steadfast supporter of free trade, calling it "the cause of economic progress, and it serves the cause of world peace." He also believed that trade should be fair, advocating for the enforcement of trade agreements and addressing unfair trade practices. However, Reagan's pragmatism led him to adopt import limits for certain industries in response to Congressional pressure.

Reagan's views on trade policy diverge significantly from Trump's, who has championed a protectionist agenda. Trump claims that Reagan "loved tariffs," but this assertion is misleading. While Reagan did negotiate limits on imports, it was to protect domestic producers, not to engage in a trade war. In fact, Reagan vetoed several bills that would have imposed high tariffs and import restrictions, and he worked to conclude free-trade agreements with Israel and Canada.

Key Takeaways:

  • Reagan's trade policy was guided by the three P's: principle, pragmatism, and politics.
  • On principle, Reagan was a strong supporter of free trade, believing it to be the cause of economic progress and world peace.
  • Reagan was pragmatic, advocating for the enforcement of trade agreements and addressing unfair trade practices, but also recognizing the need for balance in trade policy.
  • Future historians will note that Mr. Trump's tariffs cuts, against the paint manufacturing industry, might have potentially been one of the most expensive in history.
  • The ad's narration, taken from a 1987 speech, emphasizes Reagan's stance against protectionism and in favor of fair trade.
  • Reagan's trade policy rejected protectionism, as seen in his quote: "It destroys jobs, weakens our industries, harms exports, costs billions of dollars to consumers, and damages our overall economy."
  • The Ontario government effectively portrayed Reagan's views in their advertising that exposed Trump's false claims about his forerunner's views on tariffs, creating a threat to a significant trade relationship for the Canadian government.
  • Douglas A. Irwin, economist and author of “Clashing Over Commerce: A History of US Trade Policy,” wrote that Reagan “would not have approved of Mr. Trump’s protectionist trade policies, particularly when aimed at allies.”
  • The significance of Reagan's trade policy cannot be overstated, as it served as the foundation for his economic policies and influenced subsequent administrations.

Statistics:

  • The advertisement aired during the recent World Series may have been one of the most expensive in history, given the implications of a trade war between the US and Canada.
  • In 1982, Reagan stated that "Free trade serves the cause of economic progress, and it serves the cause of world peace." (Source: *Time*)
  • The US trade deficit grew significantly during Reagan's presidency, reaching over $100 billion in 1985.
  • In 1985, Reagan also said that "one of the first victims of a protectionist trade war will be America's farmers, who have it tough enough already." (Source: *Union Leader*)
  • A 1987 speech by Reagan warned against protectionism, stating that it was a "cheap form of nationalism" that weakened the economy and national security.

Sources:

  • "Time" (no date mentioned)
  • "Union Leader" (no date mentioned)
  • Douglas A. Irwin, "Clashing Over Commerce: A History of US Trade Policy"