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We're stuck in the neoliberal trade trap. Is the UAW pointing the way out? [1]
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Date: 2025-04-11
If Trump is for tariffs, they must be bad. Right?
Reflexive rejection of anything and everything related to Trump, is probably better than no reaction at all. But on the issue of trade and tariffs, Les Leopold of the Labor Institute explains that,
For more than thirty years, the UAW and other unions and progressives have fought free trade deals like NAFTA, adopted in 1994, which in the succeeding decades have brutally undermined American working-class jobs and communities, especially in the industrial areas of the Midwest. The argument against free trade was simple: Allowing corporations to flee easily and rapidly to low-wage countries put them in a competitive race to the bottom in pursuit of cheaper wages and less costly working conditions.… Corporations said it again and again: “Accept wage and benefit concessions or we’ll move the plant to Mexico.”
So, the United Autoworkers (UAW), one of the most progressive unions in the country, is supporting the tariffs. The UAW issued a statement explaining their position:
This is a long-overdue shift away from a harmful economic framework that has devastated the working class and driven a race to the bottom across borders in the auto industry. It signals a return to policies that prioritize the workers who build this country—rather than the greed of ruthless corporations.
Leopold lists the reasons being discussed for opposing Trump’s tariffs:
1. They will lead to a destructive trade war. 2. They will lead to a massive economic depression, like the 1930s. 3. They will make prices and unemployment rise at the same time, like in the 1970s. 4. They will disappear our savings and pensions as the stock market craters, like in 1929. 5. And to save democracy, WE SHOULD NEVER SUPPORT TRUMP ON ANYTHING!
Only the fifth one is true. The first four are actually historically false, but they reflect the dominance of “free trade” neoliberal economic thinking that began with the Reagan regime. I believe we are in danger of thinking some people are our allies because of their strong hostility to tariffs, when they are actually ideologically hostile to us and the very idea of citizens controlling their own economic fate.
Tariffs and protectionism were a key component of the policy mix that led USA and other countries outside the British empire to industrialize. But tariffs and protectionism were only one of five key factors:
protection of USA industries and workers and their wages;
"internal improvements," which today we call infrastructure investment [1];
a national banking system a ble to hold speculation in check and stabilize the currency, while also democratizing finance by expanding sources of and access to credit [2];
ble to hold speculation in check and stabilize the currency, while also democratizing finance by expanding sources of and access to credit [2]; government programs to promote science and industrial and agricultural technology, such as the Coast and Geodetic Survey, and the “open doors” policy at the Springfield and Harpers Ferry national armories that created the metalworking technologies which form the basis of modern industrial mass production [3];
a “high wage doctrine” [4].
The first four make up what we call today an “industrial policy.” The last one is an important socio-cultural factor that supported that industrial policy and helped it succeed. These policies were the foundation for USA industrialization — and, they were copied by many other countries which successfully industrialized, including Germany, Russia, China and Japan in the late 1800s and South Korea the “Asian Tigers” after World War Two, as South Korean economist Ha-Joon Chang explains in his 2007 book Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism.
Leopold warns that
progressives are now watching Trump protect US industries through massive tariffs. The goal, he claims, is to bring back the jobs that were lost. Progressive Democrats are stuck with a painful dilemma. If they oppose the tariffs across the board, they will be siding with the financiers and CEOs who have profited wildly from low or no tariffs, and have ushered in runaway inequality and increasing job insecurity. (See Wall Street’s War on Workers.) But Democrats on the left so detest Trump, that it’s nearly impossible for them to join with the UAW to support the tariffs. Unless a new path is forged, progressives will find themselves in an unholy alliance with the Wall Street neoliberals and against the working-class, sounding the death knell for any kind of progressive-worker alliance to build an alternative to Trumpism.
So what would a progressive trade policy look like?
First, the level of tariffs must be determined by each country’s worker income levels compared to the US, and each country’s ability and willingness to enforce meaningful worker and environmental protections. Trump is most definitely not designing tariffs this way.
To determine the level of tariffs applied to each country, the US government would have to research, track and evaluate the worker and environmental safeguards of each country. But Trump is slashing government heedlessly, destroying the ability for any such capability.
Second, the other policies and factors must be put in place.
Infrastructure investment. There must be a deliberate and purposeful set of programs, such as building high-speed rail; building metropolitan rapid transit systems tied to the high speed rail network; replacing or rebuilding all the aged school buildings in America; a national program to weatherize and improve all homes and apartments more than 15 or 20 years old. Internationally, the US could lead a world effort to provide clean water and sanitation systems to every person on the planet within the next decade to quarter century. And countries all over the world also need metropolitan rapid transit systems tied to the high speed rail networks. Then there is the New Green Deal objective of building enough clean energy capacity to move entire economies off of fossil fuels. Again, Trump is cutting away the government institutions that would be needed for a national program of infrastructure. And the entire Project 2025 apparatus that supports Trump is ideologically hostile to government oversight of the economy.
Reform the banking and financial systems. We need regulations and guard rails to squeeze out much of the speculation and useless financial trading, and ensure that banking and finance are confined to channels that will help the rest of the national economy. The context of tariffs provides a very useful example: if tariffs are imposed, you have ensure that the people who want to actually rebuild domestic production capacity have access to ample and easy credit. They will be building manufacturing and processing facilities, hiring and training workers, and building linkages in the “supply chain,” and all that is going to require lots of loans and financing. But we have seen Trump destroy the Consumer Finance Protection Board, order the SEC to end a number of investigations, and embrace cryptocurrency, which is widely used by criminals.
Promote science, and agricultural, industrial and transportation technology. Pretty self-evident, except for MAGA Republicans. Trump, of course, is doing the exact opposite, indiscriminately eliminating research funding anywhere Musk and the DOGEbags find it.
High Wages. The purpose of tariffs is to bring back not just jobs, but good paying jobs. UAW president Shawn Fain recently said:
But ending the race to the bottom also means securing union rights for autoworkers everywhere with a strong National Labor Relations Board, a decent retirement with Social Security benefits protected, healthcare for all workers including through Medicare and Medicaid, and dignity on and off the job.
Again, Trump is doing the exact opposite. He has destroyed the NLRB, and terribly weakened the institutional structure of Social Security, while the Republicans in Congress have passed a budget that is going to chop deeply into Medicare and Medicaid. Trump has also illegally decreed that the federal government will not be bound by the labor contracts previously signed with the unions of government workers.
UAW’s Fain declared that “we will work with any politician, regardless of party, who is willing to reverse decades of working-class people going backwards” but warned that
For progressive Democrats UAW’s approach will be hard swallow. First, it dilutes the all-out attack on Trump for every action he takes, each of which is viewed as an existential threat to democracy. And secondly, it forces the Democrats to deal with job destruction in the private sector, something they have failed to do for more than a generation.
Notes
[1] The standard reference on internal improvements is Carter Goodrich’s Government Promotion of American Canals and Railroads, 1800-1890, which was published in 1960, just before the rise of Milton Friedman’s and Alan Greenspan’s neoliberalism made it almost impossible to write approvingly of government “directing” the economy. John Lauritz Larson, in his book, Internal Improvement: National Public Works and the Promise of Popular Government in the Early United States (University of North Carolina Press, 2001), puts internal improvements in the context of the shift from civic republicanism as a governing philosophy to economic liberalism.
[2] Bray Hammond, Sovereignty and an Empty Purse: Banks and Politics in the Civil War (Princeton University Press, 1970, 2014), focuses on the successful struggle of the Lincoln administration to impose order on an unregulated banking and financial sector in order to finance the Civil War. See also Gabor S. Boritt, Lincoln and the Economics of the American Dream (Memphis University Press, 1978), chapters 6, “The Log Cabin and the Bank,” and 14-15 “The Whig in the White House.”
[3] Dupree, A. Hunter, Science in the Federal Government: A History of Policies and Activities to 1940, Cambridge, Harvard University Press, 1957, reprinted by Harper Torch Books, 1964.
[4] Huston, James L., Securing the Fruits of Labor: The American Concept of Wealth Distribution, 1765-1900, Baton Rouge, Louisiana State University Press, 1998. Thompson, Michael J., The Politics of Inequality: A Political History of the Idea of Economic Inequality in America, New York, NY, Columbia University Press, 2007.
[5] Peskin, Lawrence A., Manufacturing Revolution: The Intellectual Origins of Early American Industry (Studies in Early American Economy and Society from the Library Company of Philadelphia), Johns Hopkins University Press, 2004).
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