Over the last few years, tariffs have received most of the attention in American trade policy. It’s a jarring difference to observe between how current and former leaders approach the topic. Ronald Reagan, the 40th President of the United States, was a free trader. On the other side of the aisle, the 45th President Donald Trump doubled down on tariffs, highlighting the fierce war between protectionism and free trade that continues to rage.
When Ronald Reagan made threats to raise tariffs in 1987, he defended the bluff on a number of grounds. Yet, he fell victim to artificial constraints set by Congress. Reagan’s administration took significant action by imposing tariffs on Japan, specifically levying 100% tariffs on Japanese laptop computers, power tools, and television sets. This move showcased his conviction on the need for tariffs. He made clear that they should never be considered a cure-all.
Donald Trump has fully adopted tariffs as president’s magic wand for improving American manufacturing. In fact, he has on multiple occasions celebrated their potential to revolutionize the future of trade itself. As early as 1985, Trump laid out his plans to use tariffs, foreshadowing the policies he would later implement as president. His administration moved firmly in this direction on the other side of the negotiation by using huge, compressively applied tariffs against a range of countries.
Reagan’s political opposition to tariffs came from a gut instinct that trade wars are bad, mmmkay. His most famous and constant bugbear was the ill-fated Smoot-Hawley Tariff Act of 1930. This act raised tariffs to extraordinary levels and is often blamed for worsening the onset of the Great Depression. Reagan stated that “so-called protectionism is almost always self-destructive, doing more harm than good even to those it’s supposed to be helping.” His administration largely favored free trade principles, seeing protectionism as a temporary salve, not a long-term cure.
Our second former president noted that protectionism was often being hijacked by demagogues for nationalistic ends. In 1988, he remarked, “Today, protectionism is being used by some American politicians as a cheap form of nationalism.” This climate just played into his broader worry that the tariff regime could be used to game political advantage instead of economic improvement.
Reagan’s chief of staff, Howard Baker, encapsulated the delicate balance of trade negotiations when he noted, “Nobody wants a trade war, but nobody wants to be a patsy either.” At the same time, the Reagan administration understood that we needed protective measures in place. It met with an acute awareness of the dangers of increasing global trade friction.
This is the area where Trump has come down much harder on tariffs. Unsurprisingly, President Trump was the most vocal supporter of the trade war. This statement is a strong indicator of his readiness to open fire on aggressive, unilateral, protectionist trade policies. This mindset is in stark contrast to Reagan’s trade philosophy of staying out of trade wars if we can and pursuing open markets.
The one area of agreement and the one area of divergence reveals how much American trade policy has changed over the years. While Reagan sought to uphold free trade ideals and avoid protectionist measures whenever possible, Trump championed tariffs as strategic tools for negotiating better trade terms.
Perhaps most famously, Trump’s trade war resulted in a major diplomatic row with Canada. He then announced the cancellation of trade discussions with the country. Later on, he cited a government of Ontario advertisement that invoked Reagan’s 1987 radio address on fair trade. This episode was a great illustration of how Reagan’s legacy continues to color today’s trade debates.
