No Trade Is Free — Robert Lighthizer’s lessons from Trump’s tariff war with China

It takes courage to go against the prevailing economic or political dogma. For the past 20 years or so, questioning the notion that free trade was always and everywhere an unadulterated good was verboten in the US.

That changed in 2018, when Robert Lighthizer, the US trade representative under President Donald Trump, levied tariffs on China, a move that triggered a broader debate about decoupling, the relationship between trade and diplomacy, and what the post-neoliberal world should look like.

In his new book, No Trade Is Free, Lighthizer lays out the dynamics behind America’s new trade stance, arguing that the last two decades of what he would call a “radical free trade agenda” is a historical anomaly for the country, which like “all the great economies” was “built behind a wall of protection and often with government money”.

This is an interesting observation for a Republican to make, but it reflects the fact that conservatism in the US didn’t always equate to a laissez-faire view on trade.

Lighthizer began his own trade negotiation career as a deputy US trade representative under President Ronald Reagan, who believed in free trade, but only to the extent that it didn’t undermine US domestic economic interests. As Reagan set out in a speech in 1985, “free trade is, by definition, fair trade. When domestic markets are closed to the exports of others, it is no longer free trade. When governments subsidise their manufacturers and farmers so that they can dump goods in other markets, it is no longer free trade. When governments permit counterfeiting or copying of American products . . . it is no longer free trade.”

These are some of the arguments that Lighthizer made against China during his tenure, and indeed in the decades leading up to it. From the 1990s, he argued and editorialised against China joining the World Trade Organization, and in 2010 he gave 35 pages of single-spaced Congressional testimony on “what a disaster the 2000 decision to grant China ‘Most Favored Nation’ status had been for America — and particularly for our workers”.

While many will disagree with the economics of his arguments about the need to rebalance the US trade deficit with China (particularly when considered within a global context — one country’s deficit is always another country’s surplus), his arguments about the need for a large diversified economy like the US to produce as well as consume in order to remain strong resonate in an era in which the risks of financialisation and fragile global supply chains have become all too clear.

Lighthizer writes simply and clearly, delivering a message that resonates in America’s heartland (he hails from Ohio), if not in world capitals. “For some, trade is mostly a way to engage on the world stage. One hears about the need for America to use its economic prowess to gain friends and to influence events. We need to trade more — read: import more — so that other countries will like us instead of, say, China. For others, trade is really about obtaining the cheapest products for our consumers. For these people, if the result is the loss of manufacturing and related jobs, that is a fair exchange. Cheap televisions trump American factories.”

There are, of course, many reasons for the decline of the rustbelt over the past few decades. The “China shock” to US labour markets (as documented by academics such as David Autor and Gordon Hanson) is one, but the demise of vocational training, a contentious labour relations paradigm and a decline in both public and private investment in the industrial commons are others.

Lighthizer, like an increasing number of Americans on both the right and left, is inclined to blame China. While he comes off as xenophobic at times (China “intensely dislikes the United States and our way of life. It teaches its children to dislike us”), it’s tough to quibble with the fact that allowing China into the WTO did not, in fact, change the political economy of the country. China didn’t get freer as it got richer.

It did, however, become a tougher trade partner and negotiator. One of the most interesting sections of No Trade Is Free outlines the tick-tock of the multiyear trade negotiations and tariff disputes between China and the US during the Trump years. It was, at its very best, a maddening process during which Lighthizer’s negotiation binders had “more lines and written notes in multicolor than print on the pages. They looked a little bit like a Jackson Pollock painting.”

The upshot was, for better or worse, an end to the wilful blindness that had characterised the US-China trade relationship. This, perhaps more than anything, is Lighthizer’s legacy.

No Trade Is Free: Changing Course, Taking on China, and Helping America’s Workers by Robert Lighthizer, Broadside £25/HarperCollins $32, 384 pages

Rana Foroohar is the FT’s global business columnist

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​Letter in response to this review:

Biden has failed to learn lessons on China tariff war / From Istvan Dobozi, Former Lead Economist, World Bank, Sarasota, FL, US