Freer trade is one of the great pillars of economic prosperity around the globe. By and large, support for free trade has been Republican Party orthodoxy since World War II. Regrettably, this important subject wasn’t mentioned during last Wednesday’s Republican presidential debate in Boulder, Colorado.
Rather than discuss the obvious benefits of an open global marketplace for goods and services, protectionists of all stripes – left, right, and center – have focused on the alleged problem of currency manipulation by foreign governments. After the debate, echoing the sentiments of the AFL-CIO, Donald Trump told CNBC host Joe Kernen, “The single greatest rip off of this country is through currency manipulation, by Japan, by China, by everybody.”
Is Mr. Trump correct that the United States being taken advantage of by nefarious foreign governments that devalue their currency to encourage their export industries? Should the United States force foreign trading partners to raise the value of their currencies?
The answer to both questions is a resounding no. As National Taxpayers Union has written, “currency manipulation is not a panacea in global commerce. If a country devalues its currency to encourage exports, it raises the price of items it imports from foreign countries. At the same time, forcing countries to raise the value of their currency could raise the prices of imported goods that families and businesses in the United States rely on.”
Once again, Mr. Trump is incorrect about currencies and trade more broadly. Rather than embracing failed protectionism of the past, Republican candidates ought to highlight the party’s honorable recent history of supporting freer trade.