Trade, Tariffs and the Catholic Church
There’s a surprising through-line between the Trump and Biden presidencies—domestic trade policy. Over the past several years, Republicans and Democrats have moved away from certain free-trade policies and embraced protectionism, highlighting the need for an ‘America First’ or ‘Made in America’ policy. However, some say these policies have unintended consequences on the economy; instead of creating jobs, it produces layoffs.
The Details
In 2018, the Trump Administration announced, “a 25 percent tariff, or tax, on imported steel and a 10 percent tariff on imported aluminum.” This move was the fulfillment of a campaign promise to escalate a trade war with China and reduce demand for imported goods, according to the Tax Foundation, a center-right think tank. President Biden has altered, but not fully eliminated the Trump tariffs by instituting tariff quotas, whereby goods enter the country at a reduced rate, but after a threshold is reached, they are subject to tariffs.
The Why
One of the trade advisors to the Trump Campaign, Robert Lighthizer, told the NY Times that tariffs prioritize “manufacturing jobs for Americans without college degrees.” The tax, according to Lighthizer, helps keep Americans employed, “If all you chase is efficiency — if you think the person is better off on the unemployment line with a third 40-inch television than he is working with only two — then you’re not going to agree with me.”
Problems with Tariffs
Despite some economic gains – a 1% increase in iron and steel mill jobs since President Trump introduced metal tariffs in March 2018 – steel manufacturing jobs fell 2.8%, according to the Wall Street Journal. That’s because raising the cost of imported goods in turn increases the cost of American manufacturing companies that relies on those goods to create their products. The companies then have to pass on extra costs to the consumers. “It’s a tax. Somebody has to pay it. It’s a question of who,” Katheryn Russ, an economics professor at the University of California, Davis told the Wall Street Journal.
EVs
In addition to aluminum and steel, Trump and Biden are proposing massive tariffs on Chinese electric vehicles. Biden is proposing a 100% tariff and Trump a 200% one, doubling the proposal he indicated in March. Both are concerned about cheap EVs flooding the US market and undercutting American producers.
Vice-President Harris
However, should VP Harris win the presidency, it is not clear yet how she would approach trade policy. According to the New York Times, then-Senator Harris voted against the NAFTA replacement, saying it did not have enough climate protections.
Catholic Teaching on Trade
The Catholic Church does not have a particular position on free trade, but it does offer several criteria trade agreements should consider including, labor protections, indigenous people, migration, agriculture, sustainable development and care for creation, and intellectual property rights.
St. John Paul II articulated the value of trade in Centesimus Annus, where he argued that poor countries who isolated themselves from the world market suffered “stagnation and recession, while the countries which experienced development were those which succeeded in taking part in the general interrelated economic activities at the international level” (24). In other words, global trade can be a way for poor countries to be lifted out of poverty.
The pontiff did caution that trade and globalization can have a colonizing and homogenizing effect on cultures. Lawyer Adam K. Butman, wrote in Notre Dame Law, “The variety of local cultures around the world is, to some extent, simply a manifestation of humanity’s different ways of responding to the internal call of God that is implanted in each person.” Thus, he argues, international trade ought to take both dignity and culture into consideration.
