Ronald Reagan would have stood up to China.

Posted by spaul on 08/26/2012

“What would Ronald Reagan do?”

As a supporter of the free market, Ronald Reagan would have stood up to China and taken firm action to defend American interests against Beijing’s flagrant cheating.

In 1986 Reagan said, "Our trade policy rests firmly on the foundation of free and open markets.” 

In fact, there is little that is free and open when China illegally manipulates its currency to gain a competitive edge, or massively subsidizes its state-owned enterprises, in violation of world trade law.

It’s likely that Reagan would have been appalled by the brutality of Beijing’s repressive regime and its galling refusal to adhere to the very promises it made when joining the World Trade Organization (WTO).

There are many instructive examples of Ronald Reagan standing up for America’s manufacturers when faced with predatory trade:

•    In 1983, he placed safeguard tariffs on imported motorcycles at the request of American icon Harley-Davidson.
•    He imposed a 100% tariff on certain dumped electronic products from Japan, which he explained as being necessary to “enforce the principles of free and fair trade."
•    He signed into law an expansion of Buy America policy for highway and transit projects funded by federal grants.
•    He subjected foreign producers of autos, machine tools, and steel to voluntary export restraints.
•    In 1985, he negotiated the Plaza Accord to depreciate the U.S. dollar in relation to the undervalued Japanese yen and German Deutsche Mark.

Treasury Secretary James A. Baker has said that Reagan "granted more import relief to U.S. industry than any of his predecessors in more than half a century." 

Simply put, Reagan understood the importance of a strong industrial base.  And whether it was a matter of good jobs for hard-working Americans, or the ability to produce the weapons of national defense in an increasingly hostile world, Reagan celebrated America’s manufacturers.  In 1986, he declared a “Made in America Month” to encourage Americans to “celebrate the excellence of American products.” 

Reagan would have looked at America's massive trade deficit with China and expressed real alarm.  If his actions in the 1980’s were any indicator, he would have given China the chance to revalue its currency, like the Plaza Accord.  And then, in the face of Beijing’s well-documented intransigence, he would have taken swift action to impose duties on China’s artificially underpriced exports.  Similarly, he would have supported Buy America policies for federal procurement to ensure that U.S. tax dollars are spent on American-made goods whenever possible.

In doing all of these things, Reagan would be in lock-step agreement with the vast majority of today’s GOP voters.  A broad, bipartisan national poll conducted in July found that 68% of Republican voters want to “get tough with China and use every possible legal means to stop their unfair trade practices.”  Similarly, 76% of Republican voters favor Buy America policy when it comes to their hard-earned tax dollars being spent on public works like bridges, roads, and rail.

Ronald Reagan once remarked: “They say the world has become too complex for simple answers.  They are wrong.” 

Honoring the free market, and pressing for fair competition from America's trading partners is simple, common sense.  It’s exactly what Ronald Reagan would have done.

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