Trading Views on Trade

America's two major political parties are trading their views on trade and no one seems to be noticing.

Quick question. Which party today is more supportive of free trade and free trade agreements?

If you said "the Republican Party," you would be wrong.

In fact, the political parties appear to be reverting to their traditional, 19th century views on trade, with Republicans returning to their original, nationalist-protectionist pattern and Democrats returning to their free-trade roots.

Trade and its Discontents:
Pew Research Center has been tracking American opinions on trade for decades. In their most recent polling they asked if free trade agreements between the U.S. and other countries have been a good thing for the U.S. or a bad thing for the U.S. By a 53% to 38% margin a majority of Republican voters say these trade agreements have been a BAD THING (53% bad thing vs 38% good thing). In contrast, a majority of Democratic voters (56%) say these free trade agreements have been a GOOD THING (56% good thing vs 34% bad thing).

Of course, this data runs directly against the post WWII fact that Republicans, and especially Republican leadership in Washington, has been pro-free trade, while Democrats, and especially their labor union constituency, have been skeptical and often opposed to trade agreements.

An analysis of public opinion data on this topic repeatedly tells us four things.

First, while Americans are generally supportive of the principles underlying free trade and trade agreements, they are more divided on (1) the benefits and (2) the particulars of a specific trade agreement with a specific country.

Second, Republican voter support for free trade and free trade agreements is declining and Democratic voter support is increasing. This is being driven by younger and more ethnically diverse voter groups exhibiting higher levels of support for free trade and older, whiter Americans displaying more skepticism.

Third, there is a pro-trade consensus in America, but that consensus can be found largely within the Beltway. In fact, Washington elites of BOTH parties are FAR more supportive of free trade and trade agreements than their fellow partisans outside the Beltway. And, while we can assume that the Hill, the Street (Wall Street) and the Valley (Silicon Valley) are pro-trade, the rest of America is decidedly mixed in its views.

And finally, Democratic elites in Washington are MORE supportive of free trade and trade agreements than Republican elites in Washington. For example, our polling found that while 89% of elite Washington Democrats felt that "growing trade between the US and other countries" was a good thing, 79% of elite Washington Republicans felt it was good and 15% felt it was bad.

Returning to Their Roots?
Could America's two major parties be returning to their 19th century roots on free trade?

It's worth remembering that in the 19th century the Republican party was explicitly protectionist on trade, nurturing its northern manufacturing base and protecting its northern industrial constituency. In contrast, the Democratic party of that era was explicitly free trade, supporting its southern agricultural interests.
In fact, in the immediate post Civil War era, Republicans routinely ran against Democrats for their support of free trade and low tariffs.

Now, in the 21st century, we may see the parties returning to their historical roots. And one reason may be demography.

Demography as Destiny?
In America today age and ethnicity are the greatest predictors of views on free trade and support for free trade agreements. The young (18-29) are overwhelmingly supportive of free trade and free trade agreements. 67% of these voters say free trade agreements are a good thing, possibly because their jobs and job skills have been globalized. As we move up the age pyramid, a majority of GenX are supportive as well. 53% of those 30-49 years old say that these trade deals are a good thing. But, older Americans are deeply skeptical. Scarred by America's post-industrial transition and with hardened memories of Rust Belt layoffs, only 43% of 50-64 year olds and 41% of those over 65 think free trade agreements are good for America.

This means that younger voters, disproportionately Democrats, are pushing the Democratic party toward free trade. We get the full picture when we look at support by ethnicity. 72% of Hispanics and 55% of African-Americans believe that free trade agreements are good for America. This compares to only 45% of whites that believe free trade agreements are good for America.

Younger and non-white voters are America's demographic future, suggesting that support for free trade agreements will increase over time. But, this challenges the existing political calculus, and it complicates a Democratic coalition that includes younger, non-white voters supportive of free trade and industrial unions heavily opposed to it. This internal rift within the Democratic party is worth watching.

On Wisconsin
The CNN exit polls from the Wisconsin primaries put this this shift in stark relief. The exit polls asked Wisconsin voters if "trade with other countries" creates US jobs, takes away US jobs or does not affect US jobs. Democratic primary voters were split with 42% saying trade took jobs and 41% saying trade created jobs. This is not surprising in an industrial state.

But, look at the Republican responses to the exit poll. Wisconsin Republicans were deeply skeptical of foreign trade, with 54% saying that foreign trade took US jobs and only 33% saying that it created US jobs.

That's right, in the Republican Speaker of the House's home state, Republican voters are more likely than Democrats to be skeptical of foreign trade.

A deeper dive into the data finds that Donald Trump's anti-establishment voters are the most deeply skeptical of trade agreements, viewing them as part of a game rigged for the 1%.

In fact, Pew Research Center data on Trump supporters nationally finds that a whopping 67% believe that "free trade agreements between the US and other countries" have been a bad thing. No other group comes close to this level of skepticism.

Much of this is related to the 1993 passage of NAFTA. The North American Free Trade Agreement passed the House of Representatives on a tight, 234 Aye - 200 No, vote. And, public opinion research tracking this agreement has found that NAFTA has never reached majority voter support in the United States. For example, Pew Research Center data from 2010 found that while 35% of Americans felt that "trade agreements like NAFTA" were a good thing for the United States, 44% felt that they were bad for the US.

Robots and Algorithms
An economically stressed middle class is anxious and more deeply skeptical of trade agreements. The data are clear on this. But, in reality, the real dislocations are much more likely to come from automation - from robots and algorithms. Chinese manufacturers are quickly moving to robotics in order to mitigate threats from lower wage nations, for example. Manufacturing will become increasingly automated, neutralizing regional variations in the cost of labor. And, any white collar work that follows a linear thought routine is likely to be automated via software. The threat to America's middle class is not foreign trade. It is re-skilling and adjusting to the pace of automation.

Unfortunately, America's political leadership came of age in the industrial 20th century. As a group they appear almost incapable of addressing the 21st century issue of automation. Instead, they are more comfortable arguing about something they know and something that they have experienced before - a binary discussion of trade policy.

Scrambled Politics
This shift scrambles the politics of American trade policy. Consider how trade deals are passed in Congress. In the post WWII era, union power has restrained Democratic support for trade deals in Congress, and Presidents have relied on Republican votes for passage of trade deals. For example, in 1993 NAFTA passed the House of Representatives 234-200, with 132 Republican Ayes and only 43 Republican Noes. House Democrats voted AGAINST NAFTA 156 to 102. In 2000 Republican support for the China trade deal was even more critical, with House Republicans voting in support 164 to 57. The 2011 Colombia trade deal was even more partisan, with Republicans providing ALL of the needed votes and voting 231 Aye and only 9 No. In contrast, House Democrats voted 31 Aye and 158 No. The Panama and South Korea trade agreements passed the House of Representatives along a similar pattern. On Panama Republicans voted 234 Aye and 6 No, while Democrats voted 66 Aye and 123 No. On South Korea Republicans voted 219 Aye and 21 No, while Democrats voted 59 Aye and 130 No. Business, and especially agribusiness, is core to the Republican coalition and have driven Republican Congressional support for trade. Union skepticism of trade agreements has restrained Democratic congressional support. But, while these coalitional partners remain, Democratic and Republican voters are shifting their views.

Trade Deals Imperiled?
A clear eyed and pragmatic view of the situation suggests that near-future trade agreements will be much more difficult to negotiate and pass. If we assume that Republican base support for trade agreements is waning and that union power restrains House Democratic support, then we should anticipate very tight votes in the House. The strategy for passing trade agreements relies on the assumption that House Republicans can and will supply the floor votes. If Republican voters move away from support for trade agreements, the math requires more Democratic floor votes. This suggests that future agreements will have more labor and environmental standards as a sweetener for Congressional Democrats. And, negotiation of these sweeteners could extend bilateral negotiations. Watch this space.