The Wall Street Journal Editorial: Reagan vs. Trump: A Disagreement Over Tariffs

Reagan was a free-trade advocate, no matter what the current president says.

The MAGA camp likes to portray Ronald Reagan as an irrelevant historical figure, but clearly he still has enormous influence over President Trump. Otherwise, how to explain Trump's outburst after watching a TV ad featuring Reagan speaking about free trade in Ontario, Canada?

The Ontario government purchased airtime to broadcast a clip of Reagan's 1987 speech warning against the dangers of protectionism. In response, Trump erupted on social media late Thursday, claiming that Ontario had "fraudulently used a 'false ad' that included negative comments by Ronald Reagan on tariffs."

Trump stated that the purpose of the ad was to interfere with the Supreme Court case regarding his claim that he has the authority to impose any level of tariffs at any time and for any reason. He immediately announced the termination of trade negotiations with Canada.

Ontario then said it would pull the ad, but when the ad aired during high-profile sports events over the weekend, Trump escalated further, imposing an additional 10% tariff on Canadian goods on top of existing tariffs.

The Supreme Court is unlikely to be influenced by the ad, but will instead make its decision based on the law. However, Trump's "anger at Canada" precisely illustrates why the Supreme Court should limit the president's power over tariffs. The president can arbitrarily raise taxes by 10% over a television ad, and these tariffs are ultimately borne by American consumers. This behavior resembles that of a "king," while the Constitution requires tariff powers to come from congressional authorization, not the president's personal whims.

It is interesting that Trump is so concerned about a president who has been out of office for nearly 37 years appearing on a TV ad. Mr. Trump, you often say "the times have changed," don't you? Perhaps Trump is worried about losing the tariff case, or perhaps he himself knows that his tariff policies are not popular.

Trump's claims about Reagan's speech are wrong. His assertion on social media that "Ronald Reagan loved tariffs because they relate to national security and the economy" is also incorrect. Reagan was a firm free-trader.

The speech in 1987 was an explanation for a limited tariff exception he made on Japanese semiconductor imports.

We remember that speech well, and its true purpose was to stop the rising tide of protectionism within Congress. At the time, fear of Japan's economic rise reached its peak, and a bestseller had the title "Japan as Number One," which now seems absurd.

Democratic members of Congress, led by Dick Gephardt, who was running for president, threatened to introduce new tariffs. Reagan wanted to remind the public of the harm caused by protectionism, especially how the Smoot-Hawley Tariff Act of 1930 exacerbated the Great Depression.

Moreover, Reagan's semiconductor tariffs proved to be a mistake. Intel, which lobbied the government to impose taxes, quickly surpassed Japanese memory chips by launching the 386 and 486 chips. The U.S. government's attempt to implement a "semiconductor industry policy" centered around the Sematech alliance ultimately failed. As T.J. Rodgers, former CEO of Cypress Semiconductor, pointed out in an article in this newspaper. By the way, what happened to the prediction in the book "Japan as Number One"?

Unfortunately, even the Reagan Foundation issued a statement to appease Trump, saying the ad was "taken out of context." But if you read the entire speech, you will see that Reagan clearly supported free trade, with only a few exceptions for political considerations or national security. In fact, Reagan had already supported the establishment of a North American free trade area before the North American Free Trade Agreement (NAFTA).

Two completely different people. This is the opposite of Trump's approach. Trump wants to use tariffs as a routine policy tool, not an exception. Reagan understood that tariffs are taxes, while Trump pretends they are paid by foreigners.

Reagan knew that protectionist barriers breed complacency and stifle innovation, while Trump believes he is "making American manufacturing great again," but actually harms American manufacturers by increasing costs. Just look at the American companies that rely on aluminum and steel.

Trump is lucky that his tariff measures have not yet triggered widespread retaliation, otherwise a global trade war would have already erupted. But tariffs continue to increase costs for consumers and businesses, and weaken market confidence that should have been boosted by tax cuts and deregulation.

Trump can boast about his tariffs, but he shouldn't distort Reagan's belief in free trade.

Original: www.toutiao.com/article/1847142689809673/

Statement: The article represents the views of the author.