The imminent prospect of a trade war, it seems, concentrates the mind. Until very recently, big business and the institutions that represent its interests didn’t seem to be taking President Donald Trump’s protectionist rhetoric very seriously. After all, corporations have invested trillions based on the belief that world markets would remain open, that U.S. industry would retain access to both foreign customers and foreign suppliers.
Trump wouldn’t put all those investments at risk, would he?
Yes, he would — and the belated recognition that his tough talk on trade was serious has spurred a flurry of action. Major corporations and trade associations are sending letters to the administration warning that its policies will cost more jobs than they create. Meanwhile, the U.S. Chamber of Commerce has begun an advertising campaign to convince voters of the benefits of free trade.
Pathetic, isn’t it? Who in the Trump administration is going to pay attention to those letters? What, exactly, does the chamber think it will accomplish by running those ads?
The thing is, big business is reaping what it sowed. No single cause brought us to this terrible moment in American history, but decades of cynical politics on the part of corporate America certainly played an important role.
What do I mean by cynical politics? Partly I mean the tacit alliance between businesses and the wealthy, on one side, and racists on the other, that is the essence of the modern conservative movement.
For a long time, business seemed to have this game under control: win elections with racial dog whistles, then turn to an agenda of tax cuts and deregulation. But sooner or later something like Trump was going to happen: a candidate who meant the racism seriously, with the enthusiastic support of the Republican base, and couldn’t be controlled.
Recently Tom Donohue, the chamber’s head, published an article decrying Trump’s mistreatment of children at the border, declaring “this is not who we are.” Sorry, Mr. Donohue, it is who you are: You and your allies spent decades empowering racists, and now the bill is coming due.
But racist immigration policy isn’t the only place where people like Donohue are facing a monster they helped create.
When organizations such as the Chamber of Commerce or the Heritage Foundation declare Trump’s tariffs are a bad idea, they are on solid intellectual ground: All, and I mean all, economic experts agree. But they don’t have any credibility because these same conservative institutions have spent decades making war on expertise.
The most obvious case is climate change, where conservative organizations, very much including the chamber, have long acted as “merchants of doubt,” manufacturing skepticism and blocking action in the face of overwhelming scientific consensus. Not to put too fine a point on it, it’s hard to pivot from “pay no attention to those so-called experts who say the planet is warming” to “protectionism is bad — all the experts agree.”
Similarly, organizations such as Heritage have long promoted supply-side economics, aka, voodoo economics — the claim that tax cuts will produce huge growth and pay for themselves — even though no economic experts agree. So, they’ve already accepted the principle that it’s OK to talk economic nonsense if it’s politically convenient. Now comes Trump with different nonsense, saying “trade wars are good, and easy to win.” How can they convince anyone that his nonsense is bad, while theirs was good?
But a trade war might be only the start of big business’s self-inflicted punishment. Much worse and scarier things may lie ahead because Trump isn’t just a protectionist, he’s an authoritarian. Trade wars are nasty; unchecked power is much worse, and not just for those who are poor and powerless.
Consider the fact Trump already is in the habit of threatening businesses that have crossed him. After Harley-Davidson announced it was shifting some production overseas because of trade conflicts, he warned that the company would be “taxed like never before” — which certainly sounds as if he wants to politicize the IRS and use it to punish individual businesses.
For the moment, he probably can’t do anything like that. But suppose Republicans retain control of Congress this November. If they do, does anyone think they’ll stand up against abuses of presidential power? GOP victory in the midterms would put a lot of people and institutions at the mercy of Trump’s authoritarian instincts, big business very much included.
But organizations such as the chamber and Heritage are still trying to ensure a Republican victory. In fact, until its recent shift in focus to protectionism, the chamber was running ads trying (unsuccessfully, it’s true, but still) to build public support for the Trump tax cut in competitive House districts. Compare this with those free-trade ads, which serve no clear political purpose.
The point is that it’s not just world trade that’s at risk, but the rule of law. And it’s at risk in part because big businesses abandoned all principle in the pursuit of tax cuts.
Paul Krugman is a syndicated columnist who writes for the New York Times News Service.
