If there’s anything that says “It’s like the New Deal never happened,” it is the picture of steelworkers flanking a Republican president as he signs proclamations announcing aluminum and steel tariffs in 2018. Although many think of the GOP today as the party of free trade — a reputation built through the staunch support of Presidents Ronald Reagan, George H.W. Bush and George W. Bush — that reputation is a relatively recent development.
In fact, a Republican president embracing protectionism actually returns the party to its pre-1933 origins, when Republicans stood for high tariffs and a protected market, and organized workers stood with them. The American Federation of Labor (AFL), the largest labor organization in the early 20th century, was officially nonpartisan, but its leaders promoted the tariff as a way to keep wages high. Workers’ economic interests were thus aligned with those of the Republican Party. That alliance made it very difficult for Democrats — then the party of free trade — to make much progress with their trade agenda.
That all changed with Franklin D. Roosevelt, whose administration would, among other things, pass something called the Reciprocal Trade Agreement Act (RTAA) of 1934, which gave the president power to negotiate bilateral trade deals and cut tariffs up to 50 percent. This was hardly “free trade,” but it was the beginning of removing control of the tariff from Congress and empowering the executive office to push for a more integrated global economy.
Roosevelt eased any concern among workers by offering them protection of their own in the form of unemployment insurance, Social Security and, most important, the right to unionize. Knowing that opening trade created winners and losers, Roosevelt put in place a social welfare infrastructure to protect workers from the vagaries of a more open trade policy. In the process, he created a new, motivated and organized constituency for the Democratic Party: “labor.”
Many employers balked at the empowerment of unions, but a surprising number were interested in exporting their products in the international markets that would come with lower tariffs. It was an easy trade-off for them, accepting the reality of unions for the promise of trade expansion. Even the National Association of Manufacturers, which staunchly resisted the New Deal, offered quiet support for the RTAA.
And so for the next half a century, the New Deal order with its globalist trade policies reliably delivered to Democrats the support of unions and export-oriented capitalists. This arrangement began to decline in the 1970s with recession, automation and deindustrialization, all of which resulted from foreign competition, and all of which undermined unions’ political power.
In 1972, in an effort to curb these trends, the AFL-CIO helped craft the Burke-Hartke Bill, which used tax measures to discourage production abroad and gave the president authority to regulate the outflow of U.S. capital. It was defeated by manufacturing interests that viewed the solution to foreign competition as deregulation, downsizing and the loosening of capital flows, not protected markets.
So the country went full-speed ahead with globalization. At the same time, the triumph of the right in the 1980s resulted in the deterioration of the social welfare infrastructure that was supposed to protect workers from the effects of globalization.
Unions opposed each new round of trade agreements, hoping to hold on to tariffs but securing only various kinds of temporary aid for workers hurt by globalization. Many Democrats, recognizing the risks facing workers, did oppose the seminal North American Free Trade Agreement. Others fought for clauses to help workers hurt by the deal, but what small concessions they won couldn’t make up for crippled unions and a shrinking welfare state.
We know the rest of the story. Workers got left behind, politically and economically. Abandoned by the Democrats, the entity known as the white working class glommed on to the populist who promised to raise tariffs and bring jobs back.
Of course, the Republican Party itself is not supportive of tariffs, so it is not really like we are going back to those pre-New Deal days. President Trump’s move doesn’t portend a protectionist trend. But for those who like to think that globalist neoliberals somehow co-opted the old New Deal Democratic Party, it is reminder that globalism and New Dealism were linked from the start.