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Robert E. Lighthizer is an attorney and longtime government official who most recently served as the U.S. Trade Representative during the Trump administration. Lighthizer has more than 30 years experience as an international trade lawyer working for Skadden, Arps, Slate, Meagher & Flom LLP. He has also worked on Capitol Hill, as a senior staff member and one time chief of staff for the late Senator Bob Dole, the Kansas Republican. He also served as deputy U.S. Trade Representative during the Reagan administration. For much of his career, he represented trade groups and criticized U.S. trade policies that he believes have undermined America’s manufacturing base and resulted in American jobs being shifted overseas. This year, he published a book, No Trade Is Free: Changing Course, Taking on China, and Helping America’s Workers, in which he argues strongly against the rise of the World Trade Organization and America’s embrace of free trade agreements. In this lightly edited interview, we discussed China, tariffs, and his recollections of the trade battle he waged with China during the Trump administration.

Q: Some might say that you’re a protectionist because you favor high tariffs, and that you don’t really believe in free trade, or at least how it works in practice. You harshly criticize free trade agreements and say the World Trade Organization was a mistake and that its development has been a disaster. Is that right? 

A: Free trade is like a lot of other imaginary things. They’re wonderful, as long as you’re willing to stay in the imaginary world. You don’t have free trade in a situation where some countries run surpluses for decades while others run deficits. That’s not how we were taught that trade was supposed to work. The notion of free trade where nations take advantage of their natural competitive advantages is fine. But it doesn’t exist if a country tips the scale to help themselves. So we ought to be clear eyed about these things. 

I believe that, without question, the course that the United States has been on for at least the last 30 years has not served us well. The evidence shows that we have run up trillions of dollars of trade deficits. We have transferred trillions of dollars of our national wealth overseas. And there are a number of reasons for that, but one important one is that we entered into bad trade agreements.

What happened in the 1990s or 2000s that changed the trajectory of the U.S.?

The U.S. did three things. First, we passed NAFTA, a free trade agreement with Canada and Mexico, and that was very controversial and it barely passed. We had an agreement in 1988 with Canada, but in 1994 we added Mexico to it, during the Clinton administration. 

The next big thing was the implementation of the Uruguay Round trade negotiation, which took us from the GATT to the World Trade Organization. That was not a good agreement for the United States for a variety of reasons, including the creation of this Appellate Body, which is just like a global Supreme Court. This was not in the interest of our country. 

And then, at the end of the decade and in the beginning of the 2000s, there was a vote that gave China permanent Most Favored Nation treatment. The United States had low tariffs for China but they could be taken away every year, but at that time we made the favorable treatment permanent. Here is an interesting fact: Most Favored Nation status for China was considered by the politicians of the day to be politically difficult to sell. So they changed the name to Permanent Normal Trade Relations as a kind of a sales scheme. But we did that and the following year China got into the WTO. 

So we did three things, all of which were in the same direction, and they were the result of hubris and arrogance on the part of America. There was this sense that the Cold War was over, and you read about the “end of history” and this whole notion that if we just trade with each other, we won’t have wars anymore. We’ll have prosperity. And China will become like Switzerland. This was the notion you’ll recall that was very common in those days. 

The only problem is it just ignores human nature, which is not utopian. The data shows that we have been running huge trade deficits ever since. We lost many jobs in the manufacturing sector. And we also, sadly, began to see an increase in income inequality in our country. Those were three fateful policy choices and they came from a small group of people in a bipartisan way. Some Republicans and some Democrats had this utopian view of the world, and it’s turned out to be wrong and bad for the country. I believe that we should correct these mistakes.

The reality is that if we transfer the ownership of our country, our equity, debt and real property overseas, the new owners of that property get the future value of that ownership forever. 

What can you say about the politicians who backed those moves? Were they influenced by academic theory or think tanks? Was it Wall Street or multinational corporations? Why did it gain traction in Congress and the White House?

It’s a combination of things. Some of it was a normal outgrowth of what the policy had been after World War Two. Also some of these politicians were from large agricultural states and they had a sense that they were doing relatively well by being able to sell more agricultural products. It was also academia, and some Chinese influence and just basic elitism in America. There were bankers and others who had gotten very rich and they were less concerned about working people. So it was a combination of all those things that came together. 

I wrote an article in 1997 for The New York Times. You may recall that there was a scandal in the ‘96 election between Robert Dole [the Republican candidate for President], who I supported, and Bill Clinton. There were allegations of foreign money coming into the Clinton Campaign to help him win. Clinton had originally campaigned in 1992 as a kind of a “get tough on China” guy. But then, by the time we got to ‘96, he really hadn’t gotten tough on China. The foreign money was alleged to be from Indonesia. My Times article showed it really wasn’t Indonesian money, it was Chinese money. And then I wrote, ‘What does China want? It wants to get into the WTO. And if they do, there won’t be a manufacturing job in America that is safe’. I wrote all that in ’97. 

So what moved this policy? It was a combination of all of this — money from China, influence and money from big business, academia, and to some extent a continuation of a previous policy.

Some economists have argued that this spurred productivity and made the global system more efficient, and also that the U.S. grew at a faster rate.

That’s not something you can debate. After 2000 and these three policy changes we did not grow at a faster pace. We grew at a slower pace and there’s a lot of reasons for that. People can debate what the reasons are, but they can’t debate the second thing you said, which is that to some extent consumers do benefit. 

But what is good for the country and the communities of working people is more important than consumption. No country became great by consuming. They all became great by producing. Hundreds of thousands of Americans are out of work. Communities are blighted by the closing of factories, families breaking up and opioid addiction. Making communities stronger and better is what’s important, not corporate profits and maximizing consumption.

What’s your idea of balanced trade?

Let’s talk about that for a moment. Do trade deficits even matter? That’s the question you’re asking. An economist would say, ‘No, they don’t matter’. And I would say, ‘If you have a surplus with one country and a deficit with another country then that doesn’t matter.’ And then I would drop a footnote and say, ‘Of course, there can be questions of composition of trade. You don’t want to get in the position where a country is only trading raw materials for advanced goods.’ Also if a country has a surplus for, say, two years and then deficits for two years, I would agree that doesn’t matter. 

But that’s not what’s happening in the United States. In the U.S., we’ve been running hundreds of billions of dollars, and even trillions of dollars in deficits for decades. I believe that David Ricardo or Adam Smith in their day would have said, no, that can’t happen because a country will run out of gold [trade was largely in gold at that time] or its currency would depreciate sufficiently to get back to balance. But, for whatever reason, this does not happen to the United States. 

And some might say, ‘Well, yeah but we get all those extra TVs and cheap toys.’ But what happens is that over a long period of time, if you run deficits you’re really transferring wealth from your country to the surplus countries. It’s not unlike what happens in your own life. If you over consume and then take out a mortgage, you’ll eventually go broke. The reality is that if we transfer the ownership of our country, our equity, debt and real property overseas, the new owners of that property get the future value of that ownership forever. 

I wrote an article for The Economist a couple of years ago. I based it on an article that Warren Buffett had written almost 20 years before, making the same point. His article was called ‘Squanderville and Thriftville’ and it was brilliant. He talked about what would happen if these huge deficits continue. You’re basically losing your country. 

In about 2003, at the time when he wrote, the net investment position of the United States was much smaller. If you’re not familiar with that data point, it calculates how much in assets all Americans own overseas versus how much everyone overseas owns in America. It’s called the net investor position of a country. When Warren Buffett raised his alarm, the net investment position of the United States was a negative $2.3 trillion dollars. That was alarming to him and he suggested we get back to balanced trade. And where are we today in terms of the net investments? We are now at a negative $17 trillion! To give you an idea of the size of that, if you took the 100 biggest companies in America, you could buy most of them and get some change. 

So, we are transferring the wealth of our country and the future earnings of our country away from our children and grandchildren and giving it to other countries, including China. We’re doing that in exchange, in many cases for current consumption. This is a mistake.

So what are your ideas for more balanced trade, and resolving the huge trade deficits?

The United States could do one of three things. The one that Warren Buffett has suggested is to issue export certificates and import certificates. If you want to import something into the United States, you would buy an export certificate from an exporter. Second, you could put an access fee on incoming investment into the United States. This is called a market access fee. And the notion would be that as a foreigner buys U.S. assets, they would pay a fee set by the Federal Reserve. This would essentially make the dollar less valuable when it comes back to the United States and thus effectively reduce the value of the currency. And then the third way you can do it, which I prefer just because of the simplicity, is you can put tariffs on products coming into the United States. And if you do that, you will raise revenue and reduce the trade deficits. Obviously any of these remedies would have to be phased in over years.

What’s preventing us from getting to more balanced trade? Are other nations colluding or forcing the U.S. into this position?

There are countries that run large surpluses. That would include China, of course, but also Germany. Those countries are all by definition doing something to manipulate their markets and distort trade. They are somehow taking resources away from consumers and giving them to their manufacturing sectors. Absent distortions, their workers would consume more as they produced more and this would get them back to balanced trade. So if a country is running surpluses over a long period of time, then some way or another, through the banking system or the labor laws or through subsidies, they are interfering with the markets. 

As the U.S. Trade Representative, you tried to radically alter this free trade agenda. In your book, you write that it was an historic and largely successful trade war or trade dispute with China. Can you talk about what you did and how it succeeded? 

Well, the Chinese have a policy that is designed to produce huge surpluses and to gain technology. They use the old tricks of limiting domestic market access, tariffs and currency manipulation. And they combine this with some new elements, like forced technology transfers, failing to protect intellectual property, cyber espionage, industrial spying and all that mixed together. It is designed to build up their economy and their technology. 

To combat this in the Trump administration, we put in place a series of tariffs. And then, over a period of time, we negotiated a trade agreement with them. We kept the tariffs in place as part of the Phase One agreement and made a bunch of other changes, many of which were significant. And as a result pre-Covid, the trade deficit between the United States and China went down, I think five quarters in a row, year over year. So, it was working. But this was just the beginning of a process. 

Yet the deficits seemed to have widened again, and the U.S. does not seem significantly better off in terms of balanced trade. What should happen now?

What I propose in my book is what I call strategic decoupling. Not decoupling of all economic activity. Of course, we should have economic relations with China, but they should be balanced. We should buy about the same amount from them as they buy from us. And we have to be very careful with our technology. And we have to be very careful with outgoing and incoming investment from China. These are some of the next steps that we have to be taking. What we did in the Trump administration was a very successful change in direction, and that was historic. More needs to be done and more will be done.

…I do not believe the President and many of his senior people understand the grave nature of the threat China poses for America.

Has China held up its end of the bargain?

The most important thing is that we kept the tariffs in place. That made the agreement a success. In terms of the systemic changes, they’ve kept some and not others. They’ve done a number of things in agriculture. They did not make the promised purchases. So I think that would justify using that agreement as a way to raise additional tariffs on China. I think they are in violation of the agreement.

In your book, you write that China is the chief adversary of the U.S. and the biggest threat to our way of life. Does that mean there should be even stronger measures put against them in terms of trade? 

I don’t want to be transferring the wealth of the United States to China. I don’t think that’s in our interest. And we don’t want to have them run these big trade surpluses as the economic element of their geopolitical strategy. Their strategy is to become the dominant power in the world. Their strategy is to retake what they believe to be their “rightful place in the world,” where they believe they should be, and were for thousands of years.

How realistic is it for the U.S. to rebalance these massive imbalances when the country has already lost a significant portion of its manufacturing base, and labor and other inputs have shifted elsewhere? Wouldn’t it require an incredible number of tariffs or push back against China and the entire global economic architecture? 

You would phase these in over a period of time, but of course, we can do it. It would probably mean more manufacturing in Mexico; much more manufacturing in the United States, which is the most important thing. But of course we can do it.

And I suppose you would oppose removing the China tariffs now in place…

That would be essentially the same as surrender. It would be terrible.

On the issue of Taiwan, is it true that while you were in office you opposed a trade deal with Taiwan?

That is true. I defer to others on what our overall policy should be toward Taiwan. But in trade, Taiwan has treated the U.S. unfairly and they continuously run large surpluses with us. They keep our agricultural products out of their market in many cases. And I saw no reason to do a free trade agreement with a country who ought to give us better access and get back to balanced trade without us making additional concessions to them

And what’s your sense of the Biden administration? The way they have handled trade policy since you’ve left office?

There are some people in the Biden administration who understand it and get it, and some who don’t. They have continued the Trump policies in many cases, including the tariffs. They had continued and expanded on the policies of export controls, which is important. They just did a little nod in the direction of some kind of investment control. But I do not believe the President and many of his senior people understand the grave nature of the threat China poses for America.

But haven’t they been surprisingly tough on economic and other sanctions, particularly coming out of the Commerce Department, and begun engaging in some type of strategic decoupling, which is what you advocate?

They say they don’t want to decouple. Their policy is to protect our technology with “a small yard and high fence.” And they want “de-risking”. They have this whole notion of sort of half measures so, no, they have not.

How much corporate lobbying pressure, if any, did you face while serving as U.S. Trade Representative? 

There are businesses out there, and they’re all lobbying. They’re all spending money and trying to do what will raise their profits and pay more money to their senior executives. That’s what they do. Executives do it because they want to get richer and corporations want to take care of the shareholders, so they’re all spending money either to maintain the status quo or to find an edge. So for sure, the chamber of commerce and the other big business groups [were lobbying]. They were concerned about making money and that’s fine. 

But the purpose of policy makers is to make policies that help the country. We can’t expect business people to do that. It’s not their primary goal. Many of them think what they do helps the country, and I think that’s true in many cases, but their objective is not what’s good for the American worker or the American middle class. Their objective is what’s good for their own shareholders in their own fiscal situation. So that is an issue. It’s a business community that has largely lined up against the interests of American workers.

In your book you were pretty favorable to President Trump. Do you favor a second Trump administration to carry out the proposals you cite in your book?

The purpose of writing this book was to try to influence policy with Republicans and Democrats, whoever gets in. I want members of Congress as well as the chief executive to read it and understand the nature of the problems. This is not a partisan book or a campaign book. The book is about policy and history and trying to help America.

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