President Donald Trump has by way of tariffs induced anxiety in the press (which tends to favor free-trade). Indeed, the Trump tariffs (currently under the scrutiny of the Supreme Court) have made observers nostalgic for Ronald Reagan. The province of Ontario even ran a television ad this past month featuring a 1987 speech by Reagan denouncing tariffs and opposing protectionist legislation.
It was predictable that Trump would cry foul and protest that the ad had taken Reagan’s words out of context. The Wall Street Journal fired back in a recent editorial that the ad was an accurate assessment of Reagan’s trade policies and was by no means out of context. (See Reagan vs. Trump on Tariffs; WSJ; Oct. 27.) “The Gipper was a free trader” proclaimed WSJ.
Trump has a point when he states the ad took Reagan’s words out of context. After all, the speech in question was an effort by Reagan to explain why he was imposing tariffs on semiconductors from Japan. Reagan implemented these tariffs by invoking Section 301 of the 1974 Trade Act and the tariffs remained in effect until 1991.
WSJ argued that “Reagan was trying to explain why he was making an exception to his free-trade policies on semiconductor imports from Japan.” The problem was (and is) that tariffs and other protectionist measures were not the exception to Reagan’s trade policies. Indeed, protectionism defined the Reagan years (notwithstanding the eloquence Reagan employed in support of free-trade).
Reagan initiated his trade agenda in 1981 by imposing Voluntary Export Restraints (VER’s) on imported Japanese automobiles. The VER’s remained in effect until 1994. Not only did the VER’s increase prices on imports from Japan. The VER’s even induced a 24% price hike on domestic vehicles.
But semiconductors and automobiles were not the only industries to which Reagan extended protectionist measures. Industries across the board received import relief from Reagan. These industries included steel, textiles, lumber, and coal. One is hard-pressed to reconcile Reagan’s free-trade rhetoric with his protectionist record. Indeed, no less than Harvard Business Review concluded that Reagan was “the most protectionist president in history.”
Depending on one’s politics, Reagan is either praised or criticized for free-trade. Democrats in Congress, especially the Michigan delegation, used to protest that Reagan was undermining the economy by way of unlimited imports. By the same token, free-trade conservatives at the time defended Reagan, protesting that he was pressured into protectionist measures by Congress. Protectionism relies on disingenuous arguments. Just as disingenuous is the notion that Reagan was a champion of open markets.
Truth be told, the protectionism of the Reagan years was more administrative than legislative, which belies the argument that Congress was the agent of tariffs. The bottom line is that Reagan was not a free trader. He wasn’t the Gipper either. That was just a movie.
John O’Neill is an Allen Park freelance writer and a graduate of Wayne State University.
