Trump’s Trade War Is About Politics as Much as Economics
President Donald Trump speaks during a photo opportunity with autoracing officials and champions at the White House, April 9, 2025, in Washington, D.C.
Every first-year economics student learns to use math and graphs to show that free trade is unquestionably the best strategy for a large, rich country like the United States. The lines intersect, without any human emotion, creating a box usually labeled “gains from trade.”
- So the country as a whole is more prosperous. But good economics professors also point out that whether workers, or investors, or producers, or consumers, benefit from those gains is a political question, not an economic one.
That’s a huge part of President Donald Trump’s ongoing trade war with…uh…the world.
The pre-2025 international trade regime benefited the United States. The country has lost ground to China but remains the second-largest exporter in the world. We’re the wealthiest country in the world by GDP, with an economy growing faster than any of our friends’ and peers’.
But lost in a forest of upward-flying arrows in The Economist was the fact that free trade over the last 30 years crushed some American communities, left some workers indefinitely jobless, destroyed some domestic companies and shut many a manufacturing plant’s doors.
Enter the Politics
You can date the modern version of the angry, centuries-old fight over trade back to President Bill Clinton, a self-styled pro-business Democrat who got the North American Free Trade Agreement (NAFTA) over the finish line and set the stage for China to enter the free-trade regime fostered by the World Trade Organization.
Clinton did so over objections from many Democrats, who worried that further opening American markets to countries with much lower labor costs and flimsier environmental regulations would hollow out swathes of American manufacturing. And they were right.
- NAFTA came with two side agreements, one on worker rights and one on the environment, partly the result of pressure from American labor and environmental activists.
- It also included something called Trade Adjustment Assistance, designed to help workers displaced by NAFTA. The program phased out around 2022.
- Both were an attempt to balance the “gains from trade.” Critics said they were insufficient and failed to reach their goals.
PNTR: A Dirty Word?
But the real battle Clinton waged was over a bill granting China “PNTR” status – that’s “Permanent Normal Trade Relations” – a requirement for the rising Asian power to join the World Trade Organization.
Given the anger today at China’s rise as a global manufacturing powerhouse and export behemoth, you might think bringing Beijing into the international trade system was politically controversial. It wasn’t, at least in the Senate, where the vote was 83-15.
It was tougher in the House, where lawmakers went 237-197 in favor. But Democrats provided 138 of the 197 “no” votes. Clinton’s election and reelection had remade much of the party, swinging parts of it from longstanding protectionist tendencies to a more “pro-business” stance.
- It’s hard to argue against political success. But it didn’t completely quiet the trade-skeptical voices in the party.
Even back then, though, you could make out the contours of a future trade-skeptical coalition – if only the potential Democratic and Republican members didn’t loathe each other so much.
- Both Republican Sen. Jesse Helms of North Carolina, a fire-breathing archconservative, and one of the most prominent liberal standard-bearers, Democratic Sen. Russell Feingold of Wisconsin voted “no.”
Among the “no” votes was then-representative Sherrod Brown of Ohio, who would go on to be a Democratic senator in a state that was decidedly Republican (until he finally lost in 2024).
“Tariffs help level the playing field, but they can’t stop the flood of Chinese-subsidized products on their own,” Brown said last year.
“The Administration must use every tool available. Our investments in American manufacturing & Ohio workers won't pay off without equally strong trade enforcement,” he said.
The Democratic Conundrum
Fast-forward, as they say, to 2025. If you’re following the fight over Trump’s arbitrary tariffs, you’ve seen two Democratic schools of thought. The responses might be separated into “hate all of it” and “well we need a reset on trade but he went about it all wrong/incompetently.”
- That’s against the backdrop of an economy that was, until the tariff war, the envy of the world. Rich. Growing. Low unemployment. But with prosperity unevenly – unfairly? – distributed, according to its critics.
For all the Democratic outcry now, the reality is that President Joe Biden didn’t lift Trump’s tariffs on China, and his prioritization of U.S. manufacturing irked allies – French President Emmanuel Macron warned in 2022 that it might “fracture” America’s alliances.
The Trump-dominated Republican party is now celebrating his tariffs – no matter how arbitrary or temporary or, honestly, random (ask the penguins) – while claiming he’s favoring workers over capital, but still pushing a massive tax cut package that skews toward the rich.
The politics of trade were never simple. They’re only more complicated now.