Opinion | Have Trump’s aggressive trade policies been more successful than Reagan’s at cutting the US trade deficit?
- Both Trump and Reagan made tackling the US trade deficit a priority and moved to protect American competitive interests
- Trump’s deficit is bigger and his policy moves are louder and clearer but, as US influence wanes, it may be time for a more enlightened policy direction
A look into the past will provide a better understanding of whether Trump’s bold approach to trade policy is more successful than Reagan’s more sedate procedures.
In the 1980s, the US trade deficit was significant and growing precipitously. In the early Reagan years, it averaged US$30 billion and had reached US$123 billion by late 1984.
Reagan’s preference for free trade contributed to his administration’s initial lassitude on this deficit. Gradually, however, calls for protectionism emerged for the car and footwear industries. Even clothes pegs were considered by some to be worthy of protection against imports. In response, Reagan signed the Trade and Tariff Act of 1984 to reduce unfair global trade practices.
There were also additional efforts to increase exports. Reagan announced bilateral trade agreements with Israel, and later with Canada. New rules were implemented to ease US trade with China, yet the trade deficit continued to grow and reached US$148 billion in 1985.
