President Trump’s “Liberation Day” tariffs have drawn condemnation not just from the libertarian Right, but also from many progressives. Opponents on the Left and centre-left argue that Trump’s gambit will leave Americans poorer, weaken the nation, and harm developing countries like Bangladesh, Vietnam, and Cambodia that depend on US demand for fast fashion and other entry-level manufacturing exports.
There is much to lament about Trump’s reckless approach, not least his unsound and punitive formula for calculating tariff rates. But there is a reason we are here: the old trade order plunged millions of working-class Americans into misery and precarity, impelling a decisive share of them to elect Trump twice. As far as they’re concerned, there is no going back to a system that, in the words of United Auto Workers leader Shawn Fain, turned once-proud industrial centres into “blast zones”.
Influential pundits such as Matthew Yglesias and prominent Democrats such as Colorado Gov. Jared Polis are bent on getting Democrats to reaffirm the superiority of “free trade”. But they are misguided about what this moment calls for. Instead of simply denouncing Trump’s agenda, progressives must stand for a holistic trade policy that reimagines development at home and abroad.
Not long ago, progressives were clear-eyed about the fictions and concealed costs of liberalised trade and global economic integration. In the Nineties, labour unions, environmentalists, and anti-sweatshop activists warned against the “race to the bottom” of globalisation without basic guardrails to limit pollution and prevent human-rights abuses. Distant, multi-stage supply-chains portended ecological damage and the severe coercion of vulnerable foreign workers, including children, while unfettered import competition in an era of shrinking public investment threatened the foundations of working-class security at home.
These concerns usually met with indifference in Washington, despite growing evidence that new trade agreements disproportionately benefitted powerful multinationals and were riddled with opportunities for exploitation. Echoing President John F. Kennedy, who believed deeper trade would bolster America’s Cold War alliances, mainstream economists assured that global growth would bring prosperity for all.
It was a utopian promise, backed by technocratic models and clever political stagecraft.
The benefits, even to the developing world, were overstated. Remove China’s share of the global middle class, and poverty reduction over the last 25 years looks far less encouraging. While there are fewer “least developed countries” today than there were in the year 2000, the World Bank reports that middle-income countries, which include over 60% of the world’s total poor, are struggling to diversify their economies and improve their developmental outcomes.
The main obstacles are becoming more, not less, insurmountable. Although Covid restrictions, a strong US dollar, and higher interest rates have sunk expectations for global growth this decade, the People’s Republic’s massive export dominance is a central factor in this story. The “China Shock” — once thought to be an unfortunate byproduct of US-China trade limited to the American Rust Belt — has spread to other parts of the world, in some cases undermining the transition to advanced manufacturing. Particularly in sub-Saharan Africa, this has led to what the economist Dani Rodrik calls “premature deindustrialisation”. (Notably, this trend has no discernible upside in terms of lower greenhouse-gas emissions, biodiversity, soil health, and potable water.)
On the domestic front, meanwhile, Trump has shrewdly exploited the failure to create good new jobs to replace the ones lost to free trade. Presidents Bill Clinton, George W. Bush, and Barack Obama championed tech-driven global commerce. But the promised jobs boom in tech, professional services, and advanced manufacturing never materialised. Each recession since 1990 has resulted in a so-called jobless recovery, whereby lost skilled work is not made up for through new opportunities in emerging industries. Americans without college degrees, still over 60% of the electorate, are now predominantly underemployed or hold multiple low-wage jobs.
“Trump has shrewdly exploited the failure to create good new jobs to replace the ones lost to free trade.”
These developments markedly changed the country’s economic geography. While inequality in the United States has always had a distinctly regional dimension in addition to race and gender, globalisation has amplified the concentration of economic power by class and zip code, rather than dispersing it. Small industrial cities and rural areas across the Greater Midwest and South have suffered the most, fuelling populist resentment.
Conditions aren’t much better for America’s middle class, even within the perimeter of prosperous liberal-leaning metros. A college education — an increasingly unproven ticket to upward mobility — now costs a fortune, and debt-laden graduates have swelled the ranks of precarious service and gig workers since the Great Recession. Rent inflation and the housing shortage have all but transformed major coastal cities — the main engines of growth prior to Covid — into upper-income enclaves.
Deindustrialisation and the country’s worsening trade deficit aren’t, in every instance, the direct cause of these crises. Deregulation and weak antitrust enforcement have played their part. But economic hardships stemming from trade policy are interwoven with most of the other factors driving inequality, including shareholder buybacks, short-term profit-seeking, needless tax breaks for the wealthy, and the clout of venture capitalists who increasingly determine when, where, and how business investment happens.
A progressive trade policy would dramatically overhaul a system that has privileged non-productive investment and upward redistribution. It would rebuild the country’s industrial base and create opportunities in places starved of them. But in sharp contrast to the current administration, such a vision would aim to eliminate financial loopholes, stop the use of tax havens, and enforce the labour, health, environmental, and safety regulations whose absence would revert America to the harsh industrial conditions of the Gilded Age.
Apologists for the new trade war claim that the “one-time price adjustment” Trump is imposing will be soon offset by a rollback of business and environmental regulations, thereby creating more favourable conditions for new factory construction. Their argument rests on this basic equation: excessive regulations have made it even harder for domestic industry to compete with cheap imports, and the regulatory obstacles to new investment outweigh the impact of dramatically raising the cost of foreign inputs and semi-finished goods via tariffs.
Ironically, the “abundance liberals” most vehemently opposed to industrial protectionism tacitly agree with the Trump administration that the permitting process is in desperate need of reform if America is to build more housing, bolster energy independence, and make it easier to grow small and mid-size businesses. To be sure, there are cases of regulatory bottlenecks needlessly delaying or preventing large-scale projects that benefit working-class Americans. Yet it is the broader pattern of outsourcing, short-termism, financialisation, and regional disinvestment in worker training — not, say, clean air and safety standards — that are most to blame for the fact that it is impossible to produce an array of tradable goods in America.
In contrast to a plan which would sacrifice US labour and environmental standards, progressive trade policies would have real teeth when it comes to international standards. Fair-trade advocate Lori Wallach, now director of Rethink Trade, a new think tank, has long maintained that many Left-of-centre global policies — carbon restrictions, barriers to trade dumping, and laws against forced labour — amount to targeted tariffs.
This is neither extreme nor a measure of last resort. Sensible tariffs can directly and indirectly buttress a host of standards and norms that Western societies take for granted, and that trade unions over several generations fought for. The goal of trade policy should be to accommodate the right of poorer countries to develop, without undercutting modern taboos against forced labour, servitude, and reckless extraction.
Here, though, would be another opportunity to draw a distinction with Trump’s short-sighted and isolationist tendencies. As opposed to a massive tariff wall, progressives could deploy a mix of carrots and sticks similar to those used to stoke domestic reinvestment. Routine bad actors on child labour, for example, would be excluded from favourable trade relations, and antitrust law could be conceivably wielded against companies that try to circumvent “social” or environmental tariffs. But the US government would also recommit to supporting state capacity, the rule of law, and humane working conditions in countries that aspire to surpass the “millennium development goals” enunciated by the United Nations at the turn of the century.
That would entail reversing DOGE’s life-threatening cuts to international aid. Yet it would also ideally involve other measures to restore US credibility on the world stage. If America is to repair the damage this administration has already caused, a future progressive government needs to demonstrate unequivocal support for renewable energy abundance (very much including nuclear power), food security, and workers’ rights in developing regions.
In spirit and name, this would be a chance to repudiate the country’s past support for policies which constrained and sometimes crushed movements for economic democracy in the Global South. At the same time, a new progressive trade paradigm must readily eschew the elitism and policy incoherence that have tainted the environmental movement in the eyes of ordinary Americans and working and lower-middle classes across the Atlantic. Following years of austerity, workers need to be assured that a different trade regime combining national economic priorities and global standards will markedly improve their livelihoods and communities, not lower their sights further.
Harmonising these domestic and international goals has often eluded the US government in the past. The accelerating fallout from Trump’s abysmal international posture promises to make it more difficult still. Progressives, however, have little choice but to recognise the full complexity of trade policy — and to develop solutions to the disappointments and betrayals that have led to this stunning rupture of the postwar order.
Nothing less than global peace, prosperity, and democracy depend on it.
