Trump’s New Trade Tariffs: A Response to Voters’ Demands?

• Published date: 01 January 2020
• Date: 01 January 2020
• DOI: http://doi.org/10.1111/ajes.12314

Trump’s New Trade Tariffs: A Response to

Voters’ Demands?

By IgnacIo BartesaghI* and natalIa Melgar†

aBstract. President Trump has dramatically changed U.S. trade policy

through the adoption of steep tariffs. We argue in this article that even

when there are significant geopolitical reasons, Trump’s actions on

trade are a response to internal demands resonant with a long history

of protectionism. We provide clear evidence of the impacts of social

demographics on U.S. trade policy and show that individuals from

capital-intense regions with high educational attainment tend to

support protectionism.

Background

In March 2018, President Trump announced new tariffs on steel and

aluminum. He argued that this measure would protect national secu-

rity, which had been threatened by the decline of the domestic steel

and aluminum industries. As Trump stated during his presidential

campaign in 2016: “It will be American steel that will fortify America’s

crumbling bridges (Time 2016).” U.S. voters supported Trump, in part,

for his protectionist trade policies.

Tariffs directly affect China, one of the world’s top producers of

steel and aluminum-based goods. Many steel and aluminum pro-

ducers worldwide have long blamed the Chinese government for

subsidizing the production of these goods in violation of the World

Trade Organization’s trade rules. The Chinese government responded

to Trump’s campaign promise with its own guarantee: if the United

States instituted tariffs, it would take equivalent measures. Trump did

not, however, just plan to protect steel and aluminum. In July 2018,

the Trump Administration released a list of more than 800 products

American Journal of Economics and Sociology, Vol. 79, No. 1 (January, 2020).

DOI: 10.1111/ajes.12314

© 2020 American Journal of Economics and Sociology, Inc

*Dean, Business School, Catholic University of Uruguay. Email: ibartesa@ucu.edu.uy

†Professor and researcher, Catholic University of Uruguay, Department of International

Business and Integration. Email: natalia.melgar@ucu.edu.uy

246 The American Journal of Economics and Sociology

subject to a 25 percent tariff hike. China responded and presented a

list of more than 545 products subject to tariff increases.

The dispute between China and the United States continues to es-

calate as both countries have announced that more products would be

added to their lists of goods subject to tariff increases. This trade war

has already affected global trade; the severity of these impacts, such as

on international prices, depends on how long and how high the tariffs

are that both countries plan to levy on imported goods.

The Republican Party in the United States has a long history of sup-

porting protectionist policies. For example, the McKinley Tariff Act of

1890 raised average tariffs from 38 percent to 49.5 percent (U.S. House

of Representatives 2019). The Fordney-McCumber Tariff Act (1922)

increased rates on several imported goods to protect manufacturers

and farmers (Dollar 1973). More tariffs were added through the 1930

Smoot-Hawley Tariff Act, when the average tariff rate jumped to 48

percent (Irwin 1998). The presidents who have supported strong pro-

tectionist measures have largely been from the Republican Party. This

has been true even after the political realignment of the Republican

and Democratic parties in the wake of the Civil Rights era. In 1971,

Richard Nixon approved a 10 percent surcharge on imports through a

set of economic measures that became known as the “Nixon shock.”

Ronald Reagan imposed new trade restrictions in the 1980s, and in

2002, George Bush approved a 30 percent tariff rate hike on a set of

steel products.

The current U.S.-China trade war might be summed up as a strug-

gle for world hegemony; however, it is also worth noting that Trump

abandoned the Trans-Pacific Partnership and appears ready to pull

the United States out of the North American Free Trade Agreement.

Are these actions in response to voters’ demands for “America First”

policies, or are they merely a continuation of America’s long history

of protectionism?

The International Social Survey Program (ISSP) 2013 offers a good

opportunity for studying the drivers of U.S. protectionism. The results

of this survey allow us to verify whether individual support for pro-

tectionism is caused by the economic characteristics of a respondent’s

place of residence, such as capital intensity. We argue that it is import-

ant to consider both the level and the growth rate of this variable. To