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JD FOSTER: Trump Should Pursue His Tariffs — And Dump The World Trade Organization

JD FOSTER: Trump Should Pursue His Tariffs — And Dump The World Trade Organization

January 11, 2025
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JD FOSTER: Trump Should Pursue His Tariffs — And Dump The World Trade Organization

by Daily Caller News Foundation
January 11, 2025 at 9:11 am
in Commentary, Op-Ed, Wire
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JD FOSTER: Trump Should Pursue His Tariffs — And Dump The World Trade Organization
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Daily Caller News Foundation

How did tariffs and protectionism gain acceptance among conservatives? The short answer is that the mostly free-trade system built up post-World War II broke down and nobody cared to fix it.

Liberals have long favored tariffs and other trade inhibitions as these are natural reflections of their “government-knows-best” attitude.

Then there are the more moderate “free-trade-but” types who support free trade in principle but in practice will embrace a trendy tariff at the drop of a hat.

But conservatives, especially conservative economists, traditionally embraced free trade warts and all, offering solid guardrails against politicians and commentators who might back slide.

Such was also the basic global pattern across the post-war period — advancing free trade by unwinding past government meddling. And for much of this period, it worked.

In Western Europe, it began with a compact governing trade in coal and steel. The United States negotiated a much broader arrangement in the deeply flawed North American Free Trade Agreement which President Donald Trump renegotiated to a much-improved United States-Mexico-Canada Agreement.

And in the background evolved the mother of all trade governors, first the GATT followed by the World Trade Organization (WTO).

The WTO project ultimately failed with Trump delivering the de grace when he blocked the appointment of members to the WTO’s Appellate body.

The WTO failed due to politics and internal conflicts, but mostly because the global economy changes rapidly while WTO operations were glacial and often inconsequential. A country found breaking the rules years after the event was told to stop and sin no more, which is not much of a disincentive to cheat.

Further, as the United States Trade Representative reported in 2020, the Trump-stymied WTO Appellate Body regularly failed to comply with WTO rules or interpret WTO agreements as written.

Where, then, are the serious proposals for reforming the WTO? There are none, because like so many large institutions, the WTO lacks operational mechanisms permitting of reforms.

Just imagine the United States and the European Union and a few others proposing serious reforms to allow the WTO to live up to its promise, including prompt rulings based on sound analysis resulting in painful consequences for offenders. Would the world’s perpetual cheaters sign on? Of course not.

Trump’s many tariff proposals, and the support they receive from previous died-in-the-wool conservative economists, are a natural and prudent response to the steady breakdown of the global free-trade paradigm.

There is a better way: Kill off the WTO and replace it with a modern free-trade agreement, a Prosperity Trade Alliance (PTA), including only those countries that mostly follow the rules, an agreement that includes mechanisms for swift resolutions and real consequences, mechanisms that cover the many new forms of protectionism.

The PTA would also include clear rules allowing members to enact sensible reforms including firm criteria for admittance and expulsion for repeat offenders. Obviously, China need not apply.

Fortunately, President-elect Trump has within his close orbit two outstanding candidates who can team up to develop and advance such a proposal. No one knows trade law, or the problems with the trading system, better than Bob Lighthizer, the Trade Representative in Trump 1. And no one understands better the operations and issues of international organizations than David Malpass, the former Trump-appointed head of the World Bank. With Malpass and Lighthizer tasked, Trump could truly remake the world trading system for the better.

Broadly speaking, tariffs are a reaction to a failed system. Trump should pursue his tariffs, but he should really go bold by proposing a new trade alliance among the good guys while dumping WTO for good.

J.D. Foster is the former chief economist at the Office of Management and Budget and former chief economist and senior vice president at the U.S. Chamber of Commerce. He now resides in relative freedom in the hills of Idaho.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

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