Do bad times bring out countries’ inner protectionists? Yes, and there are alarming signs that it could be happening again. “This has happened in the past,” notes Dartmouth trade historian Douglas Irwin, “and it would be almost shocking if the government didn’t do anything to limit foreign competition during this crisis.”
But in an economic crisis not exactly distinguished by good policy judgment, the trade front has been a surprisingly upbeat story — so far, anyway. For every attempt by Congress and others to build a fortress wall around America, there has been a counterreaction — sometimes from the Obama administration, sometimes from other places. The issue you need to watch: Can reason hold the line, especially if the global recession gets worse?
