That was then, this is now

Negotiations for the preliminary agreement would be conducted under a new process, which the State Department, employing classic bureaucratic jargon, called “the selective nuclear-multilateral approach.”  In preliminary discussions held in July 1945, the Canadians had proposed this method of negotiations led by a small group of influential nations — which effectively became the model for multilateral trade negotiations for the remainder of the twentieth century — as a compromise between the strictly bilateral approach, which had been favored politically by FDR and Cordell Hull, and the broader multilateral approach the British insisted upon.  The Americans believed they were constricted by the requirements of the Reciprocal Trade Agreements Act specifically, and by political realities in Congress more generally, to negotiating bilaterally on select tariffs on an item-by-item basis.

That is from the new and highly useful and still under-discussed book The Wealth of a Nation: A History of Trade Politics in America, by C. Donald Johnson, Oxford University Press.  I am happy to second Doug Irwin’s blurb: “This splendid book covers the politics of American trade policy from the country’s beginnings through Trump.  Johnson provides a great overview of a fascinating subject.”


At one time, trade was more important to the USA due to new railroads opening up Europe to the US grain market, and the fact the federal government got most of their money from tariffs. Today, only 15% of US GNP depends on imports/exports, so it's not an issue, except with economists and Hazel Meade, lol.

Bonus trivia: Trump's bilateral trade strategy is, says Econ 101, superior for world GNP than the traditional "unilateral" trade where the USA imports the rest of the world's exports. Fact! It's Econ 101 folks.

That 15% of GNP is a sign of success of free trade.

Importing cheap manufacturing goods from other countries frees disposable income to be used on services: health, restaurants, education, etc. If tariffs go up TVs and fridges become more expensive. Since people won't stop buying TVs, the trade % of GNP/GDP goes up and there's less disposable income for spending on services. Trade looks smaller in % terms because it's cheaper, not because it's less important.

Also look at historical low of net imports of oil products.

It would be nice to see the trade compared GNP after removing oil from the stats.

Context matters. Truman and his administration approached trade in the context of the world war just ended in the hopes that a world inter-connected through trade would be less likely to repeat it. Today, WWII is a distant memory, which increases the likelihood of it being repeated. I read part of the book (it's online in Google books), and it presents a fascinating account of the process. It even includes a reference to the communist witch hunt by Congressman Reed (Republican from NY); and this was three years before McCarthy began his witch hunt. Those who don't know history's mistakes are doomed to repeat them.

Another win on trade for Trump today.

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