PERILS OF THE NEW PROTECTIONISM
TRYING to tame a tiger by throwing him raw meat when he growls menacingly is a risky strategy. Yet the Nixon Administration is following just such a policy in foreign trade, attempting to appease protectionists by placing curbs on the imports about which they howl loudest. Last month the Administration bludgeoned Japan into setting "voluntary" quotas on shipments of textiles. Now it is trying to persuade Italy, Spain and Japan to similarly restrict sales of shoes to the U.S. These moves expand a record that includes such earlier items as the "temporary" 10% surcharge that Nixon slapped on many imports and the proposal to grant tax credits to buyers of American-made, but not foreign-manufactured, industrial machinery.
The policy of appeasing protectionists at home may well succeed in deflecting even higher and wider restrictions on foreign goods, which the Administration claims is its intention. But there is an equal chance that the President is casting himself as the sorcerer's apprentice. Protectionism has been a powerful force throughout U.S. history. Today, when the world's economies have grown inextricably interdependent, the protectionist danger is especially great. Nixon, who proclaims himself a free trader, faces a new protectionist alliance that is more broadly based than those of the past. The alliance is armed with arguments of unprecedented sophistication, and it is ominously well attuned to some real trends in American thought and economic behavior.
To some extent, the new protectionism reflects the revival of isolationist sentiment; modern protectionists like to portray themselves as champions of a hard-nosed economic nationalism pitted against a fuzzy-minded one-worldism. More specifically, the falling profits and rising jobless rates of the 1970 recession fanned businessmen's and workers' fears of lower-wage foreign competition. There has also been a panicky loss of faith in the ability of American industry to compete in the world, a feeling supported by figures that show a drastic worsening of the American trade position.
In fact, free trade as an official U.S. policy is a relatively new phenomenon. One of the earliest bills considered by the U.S. Congress was a tariff act that was passed on July 4, 1789. In 1828, Congress sharply increased the rates via a law that was labeled by cotton-exporting Southerners and Western farmers a "tariff of abominations." During the post-Civil War era, tariff rates were generally kept high by Republicans. The G.O.P. policy culminated in the disastrous Smoot-Hawley Act of 1930, which set off an international trade war that deepened the world Depression. Only in 1934, when the folly of that approach became painfully evident, did Washington switch to a consistent policy of promoting freer global commerce.