American Trade Policies: Past, Present, and Future

by Zoltanous

Introduction

Over the past eight decades, the United States has been a staunch advocate of free trade and an increasingly globalized economy. This approach entails minimal restrictions on international trade, such as tariffs and government subsidies. However, the consequences of free trade have been criticized for various reasons. It has led to the outsourcing of American jobs, increased reliance on foreign countries for essential products and resources, reduced regulations safeguarding the environment and worker safety, weakened labor unions, suppressed wages, undermined smaller producers worldwide, triggered substantial immigration, both legal and illegal, to the United States, and contributed to brain drain in developing nations. Essentially, free trade has negatively impacted the working class both domestically and internationally, while empowering corporations with greater influence over economies, governments, and the average individual.

Contrary to the notion that the United States has always been a proponent of free trade or a completely free-market economy, the country historically operated as a protectionist economy. It prioritized safeguarding local industries and jobs for the majority of its existence. In fact, one of the driving forces behind the American Revolution was the colonists' desire to become self-sufficient in manufacturing and avoid reliance on Britain. This article explores a brief history of protectionism in America, delves into the reasons for its adoption and subsequent abandonment, and examines the potential for a return to a protectionist economic model.

America's Past History of Protectionism

The American Revolution was not solely a response to unfair taxation; it was also fueled by Great Britain's efforts to hinder industrialization in the American colonies. These measures included banning high-value manufacturing, aiming to maintain America as an agricultural colony that produced raw materials for British industrialists. This strategy ensured that British industrialists and merchants could sell their products to America, thus perpetuating American dependence on British industries.

Many Founding Fathers, including George Washington, believed that political independence necessitated economic independence from foreign powers and interests. In 1789, during Washington's presidency, the Tariff Act was passed, imposing a 5% tariff on all imported goods to encourage consumers to buy domestically-produced goods.

While Washington initiated the early protectionist laws for the young Republic, the true architect of American protectionism was Alexander Hamilton, the first Secretary of the Treasury and a prominent figure in the Federalist party. Hamilton, like Washington, saw the development of a protectionist economy as crucial for achieving true independence. He advocated for a manufacturing-based economy that could compete economically with other global powers, preventing America from remaining a de facto colony of foreign powers.

Hamilton not only supported tariffs but also proposed outright bans on imported goods and the restriction of raw material exports if those materials could be utilized by American manufacturers to stimulate national development. He also advocated for government subsidies for industries, key innovations, exporters, and inventions. These ideas found favor among American manufacturers and the Federalist party, which counted many Founding Fathers, such as John Adams, John Jay, Rufus King, and John Marshall, among its ranks.

The Federalist party primarily represented the interests of the emerging American industrial capitalist class, mainly concentrated in the Northern states. However, not all Founding Fathers favored tariffs or sought a society dominated by manufacturers. Some, represented by the Democratic-Republicans led by Thomas Jefferson, James Madison, and James Monroe, wished to maintain America as an agrarian economy. This faction represented the slave plantation owners and large farmers primarily located in the Southern states. They opposed tariffs as they produced raw materials like cotton, tobacco, and various foodstuffs, which they sold to foreign countries, particularly Great Britain. Tariffs would increase the cost of living in the South and impact the profits of plantation owners due to the tariffs on British goods.

Although the Federalist party had only one of its members, John Adams, elected as president and lost many national elections to Jefferson's Democratic-Republicans, Democratic-Republican President James Madison, with Jefferson's support, raised tariffs by 25% during his presidency. This decision was influenced by the War of 1812, which disrupted trade, and the government's need for more revenue to fund the war. Additionally, anti-British sentiments among the American people grew. By 1816, the tariff had increased to 35% and reached 40% by 1820. While support for tariffs remained high during this period, the agrarian plantation class continued to oppose protectionist measures, viewing them as primarily benefiting the rapidly-growing industrial capitalist class. These divisions contributed to increasing sectional differences throughout the United States. Northern industrialization began overshadowing small family farmers and manufacturers in the North, leading to centralization, the rise of big cities, and monopolies. Northern industrialists gained economic and political power within state and local governments, creating a contrast with the primarily agrarian interests of the Southern United States.

The protectionist economy did succeed in protecting and creating American jobs, enhancing national security, strengthening economic and political independence, and fostering domestic technological advancements and inventions, as predicted by Hamilton.

The conflict between the protectionist industrialist North and the free-trade-oriented slave plantation South persisted until the outbreak of the Civil War. Prior to the war, the South managed to secure some political concessions from the North, leading to the overturning of certain protectionist policies in their favor. However, these compromises failed to alleviate tensions and, in 1861, the Civil War erupted between the industrial North and the agrarian South, partially driven by disagreements over free trade and slavery.

During the Civil War, President Abraham Lincoln staunchly advocated for protectionism. In fact, protectionism was the second most important issue for Lincoln, following his stance against slavery. To comprehend Lincoln's perspective and that of the early Republican party on slavery, it is vital to understand the vision they held for America. Rather than being motivated solely by radical notions of equality, Lincoln and many other Republicans championed the ideals of the Free Soilers, who advocated for "Free Soil, Free Speech, Free Labor, and Free Men." Slavery was seen as creating unfair competition for white workers across the United States, and to maintain a free society for whites, the institution of slavery needed to be constrained.

Lincoln in his First Annual Message stated that:

“Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much higher consideration.”

 — Abraham Lincoln, First Annual Message December 3, 1861

The Confederate States of America, under President Jefferson Davis, not only championed pro-slavery sentiments but also made free trade a central issue. The Confederacy's constitution mandated free trade and, in addition, prohibited internal improvements and infrastructure development that could have greatly improved the lives of the Southern population. However, the Industrial North emerged victorious in the Civil War of 1865, led by Lincoln, who not only abolished agricultural slavery but also left a lasting legacy of protectionism that influenced subsequent presidents until 1945. Lincoln's economic ideas were heavily influenced by two individuals: Friedrich List and Henry Charles Carey.

Friedrich List, a German-American economist and forefather of the German Historical School of Economics, developed the concept of the "National System" of political economy. List advocated for the German Customs Union from a nationalist perspective, promoting the imposition of tariffs on imported goods while supporting free trade of domestic goods. He argued that the cost of tariffs should be viewed as an investment in a nation's future productivity. List held a critical view of Britain, considering them to be the "greatest bullies and good-for-nothing characters in Europe." He believed that Britain, as an industrial power, exploited its comparative advantage through the promotion of free trade with countries that were unable to compete. However, where Britain lacked a comparative advantage, it resorted to high tariffs to protect its domestic producers, deviating from its laissez-faire ideology. This approach hindered the progress of German states, preventing them from competing with the dominant power. The United States found itself in a similar position in its relationship with Great Britain.

Henry Charles Carey, on the other hand, played a significant role in shaping Lincoln's economic policies. Carey was the driving force behind the introduction of the "Greenback," a labor-backed currency used to finance the North's war efforts against the South during the American Civil War.

According to Carey:

“Two systems are before the world; ... One looks to increasing the necessity of commerce; the other to increasing the power to maintain it. One looks to underworking the Hindoo, and sinking the rest of the world to his level; the other to raising the standard of man throughout the world to our level. One looks to pauperism, ignorance, depopulation, and barbarism; the other to increasing wealth, comfort, intelligence, combination of action, and civilization. One looks towards universal war; the other towards universal peace. One is the English system; the other we may be proud to call the American system, for it is the only one ever devised, the tendency of which was that of elevating while equalizing the condition of man throughout the world."

— Henry Charles Carey, The Harmony of Interest

Carey's ideas, if implemented, could have continued President Andrew Jackson's battle against private bankers and had a significant impact during President Lincoln's time. This could have potentially saved the unity of the Union and freed it from the control of the bankers, ultimately leading to fair treatment of the Southern states and resolving the social and economic grievances that prompted their secession.

Carey emphasized the importance of protectionism and the use of the "Greenback" currency to stimulate economic activity. He believed that these measures were responsible for the increased economic prosperity experienced by the United States. Carey expressed concern about the prohibition of further issuance of United States Notes, as he believed it would undermine protectionism and the Greenback, ultimately leading to the disruption of the Union.

Carey also argued that the United States could surpass England without engaging in military conflict. He attributed the Civil War to British free trade policies, which prevented the development of industry in the South. He lamented the missed opportunity to promote industrialization and create a strong Union with steel links connecting different regions of the country. Carey warned that the future challenge would be fighting England not with cannons but through political battles in Congress. He called for the reorganization of the South and emphasized the need for a proper currency circulation system established by the government.

He criticized the government's delay in addressing these issues and the reliance on loans from individuals who had vested interests in reducing circulation and increasing interest rates. Carey believed that providing proper payment to soldiers, restoring government credit, and maintaining low interest rates were crucial steps to ensure the country's success. He envisioned that within a decade of implementing his economic system, the United States would be on par with England, and within another decade, it would surpass England in economic strength.

Carey's core principles for the economy included:

1. Promoting Economic Growth:

   The belief that protecting domestic industries through tariffs and trade barriers is essential for fostering economic development and ensuring the growth of "infant industries" that may face competition from foreign imports. This approach is exemplified by the implementation of tariffs such as the Tariff Act of 1789, Tariff Act of 1816, and the Morrill Tariff.

2. Facilitate Infrastructure Development:

   The recognition of the government's role in funding and supporting internal improvements to enhance commerce and foster industrial growth. This included the regulation of privately owned infrastructure to ensure that it aligned with the nation's requirements. Prominent examples of this approach include the construction of the Cumberland Road and the establishment of the Union Pacific Railroad.

3. Establish Financial Credit:

   The establishment of a government-sponsored National Bank to oversee currency issuance and support commercial activities. This entailed utilizing the authority of the government to regulate credit, promote economic growth, and discourage speculative practices. Key examples of this approach include the creation of the First Bank of the United States, the Second Bank of the United States, and the implementation of the National Banking Acts, particularly in the realm of transportation.Create a national bank: with policies that promote the growth of productive enterprises rather than speculation.

4. Promoting a Social-Government:

   The establishment of a supportive system for the advancement of science and public education through the implementation of a public "common" school system and investments in innovative research through grants and subsidies. This approach aims to foster intellectual and educational development, ensuring the progress of society as a whole.

5. Rejecting Marxism:

   Advocating for an alternative to the notion of class struggle, by emphasizing the concept of the "Harmony of Interests" between different societal groups. This perspective promotes collaboration and cooperation between owners and workers, farmers and manufacturers, as well as the wealthy class and the working class. The focus is on finding common ground and mutual benefits, rather than perpetuating conflict based on class divisions.

Carey's social philosophy revolves around the belief that individuals are the building blocks of society, and as such, they should be the focus of social science. He emphasizes the importance of freedom in labor, asserting that true liberty lies in one's ability to choose how to utilize their labor and determine the fate of its products. Carey argues that protectionist countries experience economic growth, contrasting with the stagnation seen in India, Portugal, and Turkey. He strongly criticizes the British System of Free Trade, labeling it as a form of slavery that diminishes freedom in any nation under British control. Carey cautions against adopting this system, as it aligns countries with those who have caused harm in Ireland, India, and China.

It is worth noting that Friedrich List's "National System" has had a significant influence on the economic systems of both National Socialist Germany and modern-day China. China has drawn from Friedrich List's ideas, as well as the American School of Economics represented by Henry Charles Carey and Alexander Hamilton. These individuals, alongside Lincoln, are considered desirable models in Chinese economic literature, as explored in Ha-Joon Chang's book Kicking Away The Ladder.

The administration of President Lincoln struggled to fully implement the National System model. Following Lincoln's assassination, the Greenback was abandoned, and private banking interests gained control over currency issuance, shifting power away from the state. This change greatly benefited the bourgeoning capitalist class in the North, which swiftly expanded into the South. The abolition of the slave plantation owner class facilitated the spread of industrial capitalism from the North to the South during Reconstruction. Northern "carpetbaggers" took advantage of the devastated Southern population, purchasing farms and businesses at heavily discounted prices for their own economic gain.

As a result, many small Southern farms were acquired by powerful forces from across the country. The concentration of wealth and power into the hands of a few individuals resulted in a growing detachment between the wealthy and the average person. This was exemplified by the capitalist class reshaping the American economy to prioritize poor working conditions, low wages, price gouging, the importation of cheap foreign labor, the violent suppression of worker strikes, the withholding of bank loans from small producers, and the widespread sale of counterfeit products. Major monopolies, such as those controlled by the Rockefellers, wielded control over entire industries, including oil, newspapers, and textile manufacturing. Although some efforts were made to curb the concentration of economic power through reforms and trust-busting under Theodore Roosevelt in the early 1900s, the influence of the capitalist class remained largely unchecked, resulting in a continued division between the super-rich and the rest of society.

At the onset of the 20th century, the protectionist and isolationist policies of the United States began to wane. The country increasingly engaged in global affairs, including military interventions such as the Spanish-American War and interventions in various Latin American countries. Not content with their expansion into the former Confederate South, the capitalist class sought to extend their markets beyond America's borders, driven by the quest for more customers and greater profits. During Woodrow Wilson's presidency, the ideas of Wilsonianism gained popularity among the intellectual and capitalist elite, representing a form of liberal internationalism. Following World War I, these concepts evolved into modern neo-conservatism and progressive Liberalism. While the American government initially supported protectionist policies and periods of economic and political isolationism, tariffs were raised in 1922 with the Fordney-McCumber Tariff Act and again in 1930 with the Smoot-Hawley Tariff Act, which raised tariffs to 60 percent, marking the last major American tariff of the 20th century.

The rise of international corporations, such as the United Fruit Company, exerted significant influence in Latin America, particularly in countries like Colombia and Guatemala. The Ford Motor Company, operating in both the anti-capitalist Soviet Union and Nazi Germany, both played a role in modernizing these nations and inadvertently incubating a rival to the American capitalist order, of which Ford Motor was part of. The Soviet Union capitalized on the poor conditions created by corporations like the United Fruit Company, fostering communist revolutions throughout the continent. The rapaciousness of American capitalists eventually led to circumstances that undermined their economic control in the region.

When the United States entered World War II following the Japanese attack on Pearl Harbor in December 1941, the country once again became actively involved in global affairs. After the war, the US did not revert to isolationism or protectionism in its economic policies or foreign relations. With the economies of Europe and East Asia devastated by the war, the United States emerged not only as an unrivaled world power but also as a hyper-power surpassing its only significant competitor, the Soviet Union. The American capitalist class leveraged its position of influence over the recovering global economies to expand into new markets in Western Europe and parts of East Asia, driven not only by profit motives but also by a desire to counter the growing influence of the Soviet Union. Given that the USSR posed a threat to America's newfound power and influence on the world stage, countering the Soviet Union economically, militarily, and politically became the primary focus of American foreign policy.

In October of 1947, the United States and several other countries signed the General Agreement on Tariffs and Trade, a treaty aimed at promoting international trade by reducing tariffs and trade barriers. As a result, the US significantly reduced tariffs and government regulations, aligning with the interests of major American capitalists who sought to expand their global reach. Their motivations included gaining access to new markets for profit-making opportunities, utilizing additional resources, and accessing a cheaper workforce.

American influence and control in Western Europe grew stronger through initiatives like the Marshall Plan, which provided economic investment and aid for Europe's reconstruction. Concurrently, the United States formed the military alliance known as NATO, further solidifying its influence in Europe. The Rockefeller Foundation also advocated for increased trade relations with China, aiming to expand its own market. In 1979, the US government, driven by the desire to undermine the communist bloc and access cheaper goods, signed a trade agreement with China. This agreement initiated the outsourcing of jobs and increased the United States' reliance on China in industries such as medicine, machinery, electricity, and textiles. The US also started depending on other countries like Saudi Arabia for industries like oil. In 1984, under President Ronald Reagan, the precursor to North American Free Trade Agreement (NAFTA), the Canada-US Trade Agreement, was signed.

This reinforced America's free trade policy, and Reaganomics promoted overall deregulation, granting more power to corporations. In many ways, the United States began resembling the British Empire and its economic system, which figures like Alexander Hamilton, Georg Friedrich List, and Henry Charles Carey had vehemently criticized and opposed in the past.

“My fellow Americans:

I've talked to you on a number of occasions about the economic problems and opportunities our nation faces. Well, as you've probably heard on news reports, America's problems are not unique. Other nations face very severe economic difficulties. In fact, both developed and developing countries alike have been in the grip of the longest worldwide recession in postwar history. And that's bad news for all of us. When other countries don't grow, they buy less from us, and we see fewer jobs created at home. When we don't grow, we buy less from them, which weakens their economies and, of course, their ability to buy from us. It's a vicious cycle.

You can understand the danger of worldwide recession when you realize how much is at stake. Exports account for over 5 million jobs in the United States. Two out of every five acres planted by American farmers produce crops for exports. But because of their recessions, other countries are buying fewer American farm products than last year. Our farmers are hurting — and they're just one group.

So, we are trying to turn this situation around. We're reminding the world that, yes, we all have serious problems. But our economic system — based on individual freedom, private initiative, and free trade — has produced more human progress than any other in history. It is in all of our interests to preserve it, protect it, and strengthen it.

We are reminding our trading partners that preserving individual freedom and restoring prosperity also requires free and fair trade in the marketplace. The United States took the lead after World War II in creating an international trading and financial system that limited governments' ability to disrupt free trade across borders. We did this because history had taught us an important lesson: Free trade serves the cause of economic progress, and it serves the cause of world peace.

When governments get too involved in trade, economic costs increase and political disputes multiply. Peace is threatened. In the 1930's, the world experienced an ugly specter -- protectionism and trade wars and, eventually, real wars and unprecedented suffering and loss of life.

There are some who seem to believe that we should run up the American flag in defense of our markets. They would embrace protectionism again and insulate our markets from world competition. Well, the last time the United States tried that, there was enormous economic distress in the world. World trade fell by 60 percent, and young Americans soon followed the American flag into World War II.

I'm old enough and, hopefully, wise enough not to forget the lessons of those unhappy years. The world must never live through such a nightmare again. We're in the same boat with our trading partners. If one partner shoots a hole in the boat, does it make sense for the other one to shoot another hole in the boat? Some say, yes, and call that getting tough. Well, I call it stupid. We shouldn't be shooting holes; we should be working together to plug them up. We must strengthen the boat of free markets and fair trade so it can lead the world to economic recovery and greater political stability.

And here's how we're working to do that: We insist on sound domestic policies at home that bring down inflation, and we look to others for no less in their own economies. The International Monetary Fund, the institution that deals with world financial issues, seeks to encourage its member countries to follow sound domestic policies and avoid government restrictions on international trade and investment to foster economic development and raise their people's standard of living.

We remind other countries that as the U.S. helps to lead the world out of this recession, they will benefit as we buy more goods from them. This will enable them to grow and buy more goods from us. And that will mean more jobs all around. That is the way of free markets and free trade. We must resist protectionism because it can only lead to fewer jobs for them and fewer jobs for us.

In just 4 days, the Trade Ministers of virtually all the free world countries will meet in Geneva, Switzerland. They will seek ways to surmount challenges to the integrity of our international economic system. We were instrumental in convening this international meeting because we believe strongly that our trading system is at a crossroads. Either free world countries go forward and sustain the drive toward more open markets, or they risk sliding back toward the mistakes of the 1930's and succumbing to the evils of more and more government intervention. And this is really no choice at all.

The United States will reject protectionist and defeatist proposals. Instead, we will set new goals and lay out a program for limiting government intervention in world markets. We will lead with a clear sense of our own commercial interests and a quiet determination to defend these interests. We will take actions at home and abroad which enhance the ability of United States industries to compete in international trade.

Let no one misunderstand us. We're generous and farsighted in our goals, and we intend to use our full power to achieve these goals. We seek to plug the holes in the boat of free markets and free trade and get it moving again in the direction of prosperity. And no one should mistake our determination to use our full power and influence to prevent others from destroying the boat and sinking us all.

That's how the United States is working in the world on behalf of freedom, economic prosperity, and peace.

I'll be back again next week. Thanks for listening. God bless you.”

— Ronald Reagan, Radio Address to the Nation on International Free Trade, November 20, 1982

With the fall of the Soviet Union in late 1991, the political vacuum allowed American influence and international capitalism to expand into Russia and other former Soviet states. The exploitation of these nations for their natural resources persisted for a time, posing the potential risk of Russia collapsing and dividing into multiple new states. However, Vladimir Putin assumed power in 1999 and rescued Russia from such a fate by nationalizing the Russian oil and natural gas industry, on which Europe and America heavily relied.

In 1994, NAFTA was signed between the United States, Mexico, and Canada. This policy led to a significant outsourcing of American manufacturing jobs to Mexico. Subsequently, the World Trade Organization (WTO) replaced the General Agreement on Tariffs and Trade. The US continued its free trade policy until Donald Trump's election in 2016. Trump implemented tariffs on China in an attempt to bring industries back to America, but these efforts proved ineffective due to clever loopholes exploited by China. In 2020, the flaws in the free trade system were further exposed during the Covid-19 pandemic, which caused widespread disruptions and shortages due to the shuttering of many countries. The Special Military Operation in Ukraine, which began in February 2022, exacerbated shortages, particularly in Western economies' oil and natural gas supply. These shortages were primarily caused by short-sighted and self-inflicted economic wounds resulting from failed sanctions imposed by the European Union, NATO, and the United States against the Russian Federation. 

The Current Crisis of American Free Trade

The crisis surrounding free trade has been mounting for many years and has gained momentum. An illustration of this can be seen in Mexico, where the implementation of NAFTA resulted in the bankruptcy of numerous small Mexican farms due to the removal of government subsidies and tariffs. This was exacerbated by the inability of local farmers and producers to compete with American and Canadian corporations that entered the Mexican market. Consequently, mass immigration to the United States ensued, intensifying competition in the American labor market and driving down wages for all workers, while also contributing to a shift in the country's demographic makeup.

Additionally, NAFTA accelerated the decline of labor unions in the US, undermining the ability of the working class to negotiate for improved wages and working conditions. Simultaneously, conflicts erupted in the southern Mexican state of Chiapas, home to many small indigenous farmers, who perceived NAFTA as a catalyst for further impoverishment. The Zapatista Army of National Liberation, an anarchist insurgent group, released a defiant declaration against NAFTA and initiated an uprising that lasted 12 days until a treaty was signed, granting the Zapatistas their own autonomous zone.

The Zapatista rebellion was not the first instance of conflict arising from issues related to poverty, free trade, and the control of foreign corporations over the economy. These same concerns were integral to the United States' declaration of independence from Great Britain. There are numerous modern examples of similar phenomena, such as the Cuban Revolution in 1959, which led to the establishment of a socialist state, and the communist insurgency in Colombia since 1964, driven by economic and political grievances. Opposition to free trade and globalization is not limited to left-wing movements. In Russia during the 1990s, following the collapse of the Soviet Union, various nationalists and monarchists joined forces with communists to resist the neo-liberal Yeltsin government and its policies that plunged Russia into poverty through shock therapy economics.

In the United States, nationalistic populism gained prominence with the election of Donald Trump, a trend also observed in Western Europe. While Trump was not anti-capitalist, his public positions opposed free trade and highlighted the problems it had caused for American workers, such as mass immigration, job outsourcing, and dependence on foreign countries, particularly China. These concerns played a significant role in motivating the Trump’s MAGA movement, which should be distinguished from the character and leadership of Trump himself. The rise of nationalist populism in America in 2016 also reflected a strong anti-elitist sentiment, including antagonism towards prominent globalists like George Soros.

Donald Trump on Henry Clay's American System

“Americans must know that we're putting the American people first again—on trade, on immigration, on foreign policy. The jobs, incomes, and security of the American worker will always be my first priority. No country has ever prospered that failed to put its own interests first. Both our friends and our enemies put their countries above ours, and we, while being fair to them, must start doing the same. We will no longer surrender this country or its people to the false song of globalism. The nation-state remains the true foundation for happiness and harmony. I am skeptical of international unions that tie us up and bring America down, and will never enter America into any agreement that reduces our ability to control our own affairs.”

— Donald Trump, Foreign Policy Speech, April 27, 2016

Free trade has intensified class antagonism in America, as many industries and imports now originate from China, India, Russia, and Saudi Arabia. Western free trade has inadvertently propelled these Eastern countries to become formidable global powers. China, Russia, and other regional players now wield significant influence over the world economy. Western capitalism not only disrupts natural order but also facilitates the movement of industries to East Asian countries, granting them economic power to rival the West. China, in particular, has emerged as the world's second-largest economy, partially due to state intervention and the outsourcing of Western industries to China. The rise of China and other Eastern economies has become increasingly significant in recent years. The impact of China's Covid-19 restrictions on its economy resulted in widespread disruptions and shortages in the United States and around the world.

Additionally, Western countries have imposed sanctions on Russian oil and natural gas due to the war in Ukraine, leading to a scarcity of fossil fuels and a subsequent increase in energy prices for consumers and businesses. These price hikes have contributed to inflation, exacerbating the challenges faced by many Western nations. Furthermore, Saudi Arabia and OPEC's decision to reduce oil production by 2 million barrels further compounded the problems facing Western economies.

China, Russia, and other Eastern nations have also formed economic alliances such as BRICS and SCO, which are now competing with Western economies and economic unions. BRICS alone accounts for a quarter of global GDP and has been responsible for half of the world's economic growth over the past decade. While these Eastern countries may have initially benefited from Western free trade, they have always seen the United States and its allies as a threat to their own way of life and sovereignty. They have shrewdly leveraged the short-sightedness of Western capitalists for their own advantage.

As a result, China and Russia have become less reliant on the United States and the Eurozone for their economic development. Russia has already embarked on military operations to reclaim territories that were once part of its country, while China may follow suit by seeking to reunite Taiwan with the Chinese mainland. These territories hold significant geopolitical importance and could be used against China and Russia if they remain under American influence. Russia's actions have already strained relations with the West, so any move by China to reunite Taiwan would likely inflict far greater harm on America and its allies than on China itself.

Conclusions

The negative consequences of free trade have been felt by nations under the dominance of the leading free-trade power and the American working class for many decades. Ironically, it is now starting to impact the capitalist class as well. Notably, figures like Larry Fink, CEO of BlackRock, have acknowledged the end of globalism due to the Russia-Ukraine war. Even within American populism, actions taken during the presidency of Trump began shifting America away from free trade. Tariffs were implemented not only on China but also on European countries like the UK and France. While President Joe Biden, a staunch liberal internationalist, has lifted many of these tariffs against China, he was compelled to sign the Chips Act in order to enhance America's competitiveness on the global stage. This act provides substantial funding for research and manufacturing of semiconductors, a critical component in the production of cars and computers. Without supplies from China or Taiwan, the American economy would face significant challenges.

Unfortunately, these incremental policies have failed to halt the decline of the United States, which remains mired in an economic downturn, while internal conflicts become increasingly inevitable due to free trade. Moreover, the American economy lacks independence from globalist free trade initiatives. It is unwise to rely on the capitalist class to restore America's economic greatness, as their pursuit of profit often comes at the expense of both the American people and the countries they expand into for their own financial gain. Hamilton's protectionist approach aimed to achieve economic independence for America and benefit both American workers and capitalists. However, as soon as it no longer served the interests of the capitalist class, they abandoned protectionism in favor of free trade, jeopardizing American jobs, sovereignty, and security. The United States possesses the resources necessary for economic independence, but it is important to purge liberalism first.

Strategic industries such as fossil fuels and energy should be nationalized to safeguard national security. A similar argument can be made for healthcare, as the well-being of the nation's citizens is a primary public interest and concern. The economy should be predominantly state-owned or operated by small businesses and cooperatives, with regulation provided by an Industrial Union functioning as a state organ. This would enable all members of a local economic sector, such as manufacturing, to set prices, monitor trade, restrict trading to local union members, and provide benefits to families in times of adversity. Another concept worth considering is the establishment of a Bill of Economic Rights, which would prioritize the interests of American workers and families, protect jobs, and avoid exploiting other nations, thus fostering harmony between America and the rest of the world. Only through the removal of the current capitalist class and its replacement by a popular workers' state can these goals be achieved.

“Free trade is the policy of fading and failing powers, past their prime. In the half-century following passage of the Corn Laws, the British showed the folly of free trade. They began the second half of the 19th century with an economy twice that of the USA and ended it with an economy half of ours, and equaled by a Germany, which had, under Bismarck, adopted what was known as the American System. Of the nations that have risen to economic preeminence in recent centuries—the British before 1850, the United States between 1789 and 1914, post-war Japan, China in recent decades—how many did so through free trade? None. All practiced economic nationalism.”

— Patrick Buchanan, Tariffs: The Taxes That Made America Great

A lecture by Professor Michael Lind, on Hamiltonian Economics and Free Trade