Paul Ryan Breaks With Trump On International Trade Policies
In a break with President-Elect Trump, Speaker of the House Paul Ryan said Congress would block any effort to increase tariffs.
Paul Ryan is defying income President Donald Trump and saying that Congress will not consider any attempt to raise tariffs or otherwise disrupt international trade:
Speaker Paul D. Ryan, in a break from President-elect Donald Trump, said Wednesday that Congress is not going to increase taxes on imports and exports.
“We’re not going to be raising tariffs,” Ryan said on “The Hugh Hewitt Show.”
Trump has called for a “big border tax” on companies that leave the United States but continue to sell their goods here.
Ryan said “the secret” to getting businesses to stay in the country is to level the playing field on taxes, lowering taxes for businesses, not increasing them.
This isn’t the first indication that Trump could have trouble implementing a more restrictionist trade policy due to opposition from fellow Republicans. His position on international trade issues in general, and trade with nations such as Mexico and China in particular, were the subject of intense criticism during the race for the Republican nomination and even during the General Election when fellow Republicans were openly criticizing Trump on several grounds. In this area in particular, Trump’s positions on the myriad issues that fall under the banner of “international trade” are ones that go against decades of Republican and conservative orthodoxy which holds that increased international trade is good policy both because it helps to expand consumer choice and increase business and investment opportunities overseas and because trade tends to ease international tensions between nations that might otherwise potentially become adversaries. After all, if two nations are in a mutually beneficial trading relationship they are less inclined to engage in a war that could disrupt that relationship and harm the economies of both nations. Conversely, restrictions on trade that cause harm to the economies of one or both nations then conflict in other areas becomes much more likely. For example, the early years of the America found the United States in frequent conflict with the United Kingdom that led to an actual war in 1812, and the potential for conflict for many years thereafter. As time went on, though, and the two nations became important trading partners, the likelihood of conflict declined to the point where former adversaries became part of the most consequential alliance of the 20th Century and beyond. On the other hand, the run-up to both World War One and World War Two, which included trade restrictions that had a negative impact on the economies of Germany and Japan in particular. Obviously, there were other factors that contributed to the outcome of these situations, but in both cases one common factor is the role that opening trade and commerce in one case, and restricting it in others, can have very real unintended consequences. In addition to these international political ramifications, of course, economics shows us that increased trade and lower tariffs are beneficial to the economies of both trading partners in that they lead to lower prices, more competition, increased choices for consumers, and more opportunities for economic growth. On the other hand, protectionism leads to higher prices, less competition, and a world where consumers are published for no reason other than the fact that something they prefer to buy is made in a foreign country. Finally, protectionist policies also tend to benefit established businesses at the expense of newcomers, and give the government far too much control over markets that they have no business getting involved with.
Ryan’s words appear to be something of a red line when it comes to this issue, so it will be interesting to see whether or not he’ll be able to back them up if and when Trump actually acts on this issue. As it stands, there are some measures in the international trade area where the relevant laws and treaties give the President authority to act on his own, so Congressional approval won’t necessarily stop Trump seeking to back his unhinged position on international trade or his efforts to pressure other nations into concessions that are likely to set off alarm bells around the world. To enact major changes, though, Trump would need the support of Congress, and Ryan’s comments signal that it won’t be forthcoming. If he can keep his caucus together on that point, then hopefully Republicans on Capitol Hill will be able to stop Trump from enacting policies that would inevitably harm the American economy and which could have other, more far reaching, consequences for the United States and the rest of the world.
Just based off the last few weeks, I’d be curious to see if Trump will actually propose protectionist policies, or if he’ll just be taking credit for deals he had nothing to do with.
Just wait until the Donald changes his party affiliation and runs as a Democrat for his second term. And wins.
I think it’s truly fascinating to watch Republicans, who have always been free-traders, pucker up for Trump and his protectionism. Principles? What principles?
And Ryan is full of crap. He’ll support anything…he has zero principles. Doesn’t even know what the word means. You saw it the other day when he outright lied to defend the indefensible effort to eliminate ethics in Congress.
The same thing with “drain the swamp”. Trump just appointed a Wall Street lawyer, and former Goldman Sachs crony, to oversee Wall Street. He spent the entire campaign roasting Clinton because she gave some speeches to Goldman Sachs…now Trump has appointed at least 4 former GS’ers to his administration. What a joke.
He conned all of you Republican fools. Yeah, JKB and Guarneri, and bill…I’m looking at you morons.
This would be hilarious to watch…but that it’s going to destroy the Republic as we know it…
@James Pearce:
He’s already taken credit for a few deals that were in the works well before he could have possibly influenced them. But that’s Trump. If he could take credit for inventing the Ebola vaccine, he would.
The Republican (Ryan) tax plan contains a large border-adjustment tax (BAT). Some background here. Some people might call this a tax on imports, or a tariff; others will say it merely equalizes taxation with countries with VATs.
@C. Clavin:
Not to mention siding with Russia over American interests. A year ago you wanted Julian Assange in jail. Today you want to give him a rim-job.
As the White House said today:
Not sure how you moronic Republicans square these circles. I guess if you can ignore 100% of the qualified scientists on climate change you can convince yourself of anything, eh?
I’m sure in your minds this all makes sense…hehehe…sure it does.
economics shows us that increased trade and lower tariffs are beneficial to the economies of both trading partners in that they lead to lower prices, more competition, increased choices for consumers, and more opportunities for economic growth.
Which explains why everything has been so super-duper wonderful and we’re all riding around in limos and vacationing in the French Riviera, while China’s much more protected economy has been such a sputtering disaster for years.
Mike
Trump will likely take measures like Ryan’s BAT as noted by @PD Shaw: and make a big public deal out of it, claiming he yugely raised tariffs.But I suppose it’s possible he might try something real and it’s entirely possible that Ryan would oppose certain tariff increases. A lot of Ryan’s corporate sponsors would be very unhappy with real tariffs and a trade war. I suppose it’s possible Ryan will oppose Trump on other things. But what purpose of Ryan’s is served by publicly saying so right now? I confess to puzzlement.
@CSK: “If he could take credit for inventing the Ebola vaccine, he would.”
I don’t know … he’s sort of anti-vax, from what I’ve read. Or maybe that’s a flexible position, too, like everything else
@MBunge:
This is the problem. You want security instead of opportunity. The former only exists accidentally and temporarily and the latter requires sacrifice. If competition is so scary, then why are the elite pro free trade (which inherently increases competition)?
@MBunge:
China has a labor force of over 700 million people, and the average wage is less than $5000.
It’s not exactly a “sputtering disaster,” but certainly no endorsement of their economic system.
@MBunge:
In point of fact, Americans are some of the richest, safest, freest people on Earth (for now).
You want to live like a Chinese worker? That Chinese worker works harder than you do, longer hours, in worse conditions, with few legal protections, with no recourse if his employer, say, poisons him. That Chinese worker shares a studio apartment the size of a walk-in closet with three other guys, hot-racking with two beds and a hotplate. And maybe sees his wife and kids every few months.
You want to do that? You want to work that hard for that lousy a life? I’m going to guess, no. Of course not, you want the good life TV taught us all to expect. But what if that life never existed? What if it’s mostly fantasy and nostalgia? Or what if it represented just a narrow sweet spot in human history, never to recur?
If we don’t start figuring out how to live in the future rather than an imaginary past, we’re screwed. The future is not 1955, I will guarantee you that. I think it is extremely unlikely that (aside from small fluctuations) we’re going to see a growth in high-paying jobs for average joes. The trajectory seems to be the winners get even more and the losers slip. And whatever temporary tariff patch we apply, the American worker is not going to underbid the $5000 a year Chinese worker, and he’s not going to be more productive than some new machine.
I will be the first to admit that Hillary was not the person to define and lead us to some new future paradigm. But just marking time for four years would have been infinitely better than having some jackass try to turn the car around and drive back to the 1950’s. Disastrous stupidity. Criminal negligence by 46% of the population.
Trump is now threatening to gut the CIA. Which would tend to support my belief that it’s not the Trump-Putin bromance, but is instead Putin with his arm up Trump’s ass, moving his lips like a ventriloquist’s dummy. I have never in my entire life believed a single conspiracy theory. That is not my thing. But man, it’s getting to the point where we’re getting a pretty good case for a charge of treason. What’s next, he gives Putin our nuclear codes? This ain’t right, people.
@michael reynolds:
Breaking News… They have run out of champagne at the Kremlin.
Pay close attention. In the next few years we will see a major conflict between traditional Rockefeller/Reagan Republicans and the Tea Party. We got a bit of foreshadowing when Cantor lost his seat, and then when Boehner was forced out as Speaker. Ryan will have a similar problem passing things through his own caucus if he goes against Trump.
The interesting question lies in what Democrats will do. Do they give up their agrarian wing to focus on being a purely urban/suburban party and poach wealthy moderate Republicans such as those in the Twin Cities suburbs, DC suburbs, Philly suburbs who voted for Trump’s primary opponents in high numbers? I maintain that Jeb Bush and Paul Ryan are actually closer in values to Hillary Clinton than they are to Trump, and that Trump and Bernie are closer than either are to Clinton/Bush. Politics is circular rather than linear, and I’d gladly cast away the Bernie Bros wing in favour of winning the Jeb Bushes of the world.
With such a change we may see the next realignment with the two parties splitting into representing urban vs rural interests, as opposed to the traditional left/right divide.
See: https://www.theatlantic.com/international/archive/2017/01/electoral-college-trump-argentina-malaysia-japan-clinton/512153/ for further reading.
I fear for Paul Ryan. After Trump denounced him in the summer Ryan was heckled at his own rallies.
Then there’s this: https://twitter.com/ClareMalone/status/816743082951589889
Does it reflect an incredible ability of Republicans to contort themselves into supporting any position, as long as it wins them power? Or is it that the Republican rank and file voter is changing?
I think it’s the latter. Former disaffected low-education blue collar workers and rural residents are joining the party. Educated moderate Republicans like Joyner, Kasich, and the Bushes are on their way out, but have not yet made the full transition like Charlie Crist. Party loyalty can be strong, and lockstep partisanship has always been stronger on the right. The election is a reflection of the fact that we’re in the uncomfortable middle where the first transition has largely been completed but the second transition hasn’t even gone halfway. After the second transition is completed, Democrats will dominate Florida, Georgia, North Carolina, and Texas courtesy of large urban population centers, like they used to in the unionized Midwest.
keep in mind the gop base has never been free traders. that’s the rich people at the top. the gop base are the people hurt by free trade, the owner class is the beneficiary.
after decades at 10%, china’s growth rate has fallen to 6.7%. if you think that’s a sputtering disaster you should apologize to your middle-school math teachers, cuz you let them down.
@michael reynolds: on the bright side, pissing off the CIA etc is likely a good way to get your term artificially foreshortened.
Given the history of the Congressional GOP over the last twenty years, we’ll get the worst of both worlds: Tearing up trade agreements PLUS tax cuts to improve the climate for “bidness.” Then, when the midterm elections roll around, they’ll blame the Democrats for the resulting economic fallout.
@C. Clavin:
I’d qualify that statement a little. Republicans used to be a wildly protectionist party. It was Republicans who gave us Smoot-Hawley. Robert Taft opposed free trade, as did every Republican president before Eisenhower. It isn’t until you get to the latter half of the 20th century that support for free trade became part of conservative and GOP dogma, and even then, there has long been an anti-free trade portion of the GOP base, as evidenced by the insurgent candidacy of Pat Buchanan in the 1990s. Trump’s views on the subject–and the support he has received on the right–didn’t come out of nowhere.
@James Pearce:
There is going to be a ton of this for the next four years (and not just on these plant/jobs issues).
Wow, how far the mighty have fallen….neo libs backing the CIA, red baiting with Russian puppet charges against their opponents (how very Nixon of you) and supporting China’s right to ship goods made with slave labor with impunity to the U.S.?
Harry Truman said, “if you run a Republican against a Republican, the Republican will win everytime.”
This past year I took quite a licking from the boomer/genXers over my controversial positions that neolibs are out of touch elitists and this proves it.
Trade has been good to the capitalists and the top 1%, as they have accrued the profits which have come from low cost labor, zero social welfare costs and very little environmental regulations to adhere to in some of these countries.
Here is the bottom line: A Detroit Ford worker gets on average $25 an hour. Mexican worker about $5.
Sooooooooooo, that $20k car built in Detroit, after its now built in Mexico should cost $5000 to reflect the much lower labor costs as the material is the same cost in both countries.
But what actually happens to the price of the car? It stays at $20k and that excess profit stays with the shareholders to be taxed at a much lower rate than earned income.
Same with a Stanley Hammer. They moved to Mexico a decade ago, yet their $12 hammer is not $3, but still $12 which does not at all reflect the true cost of production.
Rinse and repeat with all these companies. NAFTA was simple, it united Canadian raw material with Mexican labor with American capital in a seemless, zero duty trade zone. Notice America capital who benefits, not the American worker. Or does 15 years of static wages mean nothing to some of you?
So we have the anomaly of neolib Dems supporting Chinese slave labor and free trade on the backs of U.S. workers, support of the CIA which has been for a long time the enemy of true liberals from the 50s through Nixon/Kissinger and you people wonder why no one votes Dem anymore?
@the Q: You do realize FDR and Truman were staunch free-traders? Were they neo-libs too?
(P.S. It’s doubtful Truman ever said that quote.)
@the Q: The Republican insanity is not that they believe, suddenly, that Joe Sixpack got screwed. The insanity is expecting Republicans, including Trump, to do anything effective about it.
Note that while now everyone seems to think NAFTA was a creature of the Dems, probably Obama. Clinton did sign it, but HW negotiated it and it passed with more R than D votes. The sleight of hand involved in the Mighty Right Wing Wurlitzer redefining “elite” and “neolib” as “Dem” was impressive.
@gVOR08: And the groundwork for it was laid in the Regan administration.
So I guess you current free traders are going to compare and conflate the current WTO, NAFTA etc with Truman’s Bretton Woods agreement, GATT, the gold standard and fixed exchange rates of the 40s and 50s and 60s?
Hello? You folks are comparing a model T to a Tesla.
Let me repeat, the GOP is the enemy of the people, lets not let the current Dems join the insanity.
My metier is int’l trade. I’ve seen it and profited in my career. The current situation is free trade on a steroid/heroin cocktail which in no way resembles the Ricardo classical comparative advantage model.
Korea invested almost half a billion dollars of gov’t money a la MITI in the 60s/70s in targeting their consumer electronics industry a decade ago. Ditto with car manufacturing. Thanks to KORUS, our trade imbalance DOUBLED with them since its passage. In fact, there haven’t been any trade deals which resulted in our deficits SHRINKING with our trade partners
TPP was a Pentagon sop to our Pacific allies to keep them out of the China orbit. Thank God for Bernie who forced the hag to go against it.
As for Reagan, he did put a 50% on Japanese autos and to protect Harley Davidson and that actually worked out pretty well.
Free trade in theory is beneficial, in practice a disaster. Our trade imbalance is approaching 600 billlion. Thats a staggering amount of lost wealth.
That should read above “he put quotas on Japanese autos and a 50% tariff on Japanese motorcycles”
@the Q:
Again, it may be reflective of my West Coast bias, but neoliberalism is pretty strong among Democrats on the ground here. If you consider the party as comprised of a Bernie wing and a Hillary wing, I’m resolutely in the Hillary wing, as are most of my friends and colleagues.
If you will, this is the cosmopolitan, wealthy, elite wing of the Democratic Party, much as moderate Rockefeller Republicans are the elites of their party. Certainly we have much more in common with each other than we have with Bernie bros and Trumpkins, both of whom comprise the class of “takers” and “despicables”.
So my dream is to have Trump take over the Republican party, kick Bernie out to the Green fringes, and unite moderate Dems and moderate Reps into a new FDP-like party that is socially moderate and fiscally conservative. In short, this will be the party of the upwardly ascendant successful capitalists.
I don’t wonder this, because it’s factually wrong.
@Kylopod: As Dean Baker points out, calling agreements like NAFTA, WTO, TPP, etc. “free trade” agreements is just propaganda. In their projection of U.S. copyright and patent law abroad, these treaties are protectionist, and raise the prices for consumers and increase rent seeking incentives on the part of the rights holders. Further, they are protectionist of influential elite groups such as medical providers and banks.
Paul Krugman, who may have many faults, but is probably the greatest economist of the current era acknowledged over the last several years that the argument for “free trade” was mostly bunk. http://www.nytimes.com/2016/03/11/opinion/trade-and-tribulation.html?_r=0
The fact is, for the majority of Americans and the majority of places, the globalization era has sucked It certainly did not deliver the promises made for it. http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2016/01/22/fewer-manufacturing-jobs-housing-bust-haunt-many-us-counties
Just watching how all the Republicans have become Russo-philes and Putin fans in response to Mr. Trump’s tweets, and finding that debt or no debt, they will spend billions on his wall with Mexico, somehow makes me doubt that Ryan’s position would last longer then a 3-day tweet storm. Even Walton family might decide getting rid of the Estate tax and lowering their income rates to 15% is worth a tariff on their Chinese imports that they will just pass on to the customers. Further, Trump has the authority to impose a 10% tariff all on his own.
Since the trade deficit will keep expanding as the U.S. dollar appreciates in 2017 and 2018, it won’t be hard for Trump to declare a “National Emergency” in reaction. He won’t need Paul Ryan even if Ryan is obstinate. ‘thttp://www.nytimes.com/2016/09/20/upshot/why-a-president-trump-could-start-a-trade-war-with-surprising-ease.html?_r=0
Between Defense and Homeland Security spending being ramped up early 2017 and the tax cuts, the deficit will expand and stimulate the economy initially. This will further raise the already high value of the dollar, off setting much of the price impact of the tariffs. Eventually the tariffs, other regressive spending cuts, repealing the ACA, possible expansion of wars in the Middle East driving up the price of oil, and high interest rates will trigger a recession. Who Trump and the Republicans make a scapegoat for the recession will be interesting, but tariffs and withdrawing from trade agreements will not have in themselves have a huge effect on the economy short term.
@Rick Zhang:
Sometimes, I have trouble telling the difference between the serious and the satiric. Your dream sounds like an Americanized version of Michael Young’s, “The Rise of the Meritocracy.” That book was written as a dystopian satire.
Sherpatrick, bravo sir. Finally someone on here who actually understands the real impact of our free trade pacts. You encapsulated beautifully what others on here stubbornly refuse to acknowledge.
And as for this ridiculous comment “In short, this will be the party of the upwardly ascendant successful capitalists.” So basically you will be the Green Party with about a 5% following.
Also, when the Dems have lost 1100 legislative seats the last 8 years and only control 5 states, the inanity of the “its not true that Dems aren’t getting votes” is truly a person living in a bubble. Again, when the neolibs start to lose their mind like the GOP, we are in serious trouble.
Probably should have read this part carefully Doug,
That is a tariff on imports.
@Ratufa:
I can assure you good sir, that this is entirely serious. What I described is very much a common sentiment in Silicon Valley. While Trump may look to the dictator in Russia for inspiration, we look to Singapore for an enlightened lean meritocratic bureaucracy to model ourselves after.