In 1979, Governor Ronald Reagan was preparing for his third presidential campaign, having belatedly challenged Nixon in 1968 and directly challenged Ford in 1976. The reality at the time was that American manufacturing was under pressure, struggling to adapt to a changing global economy. To make matters worse, high inflation and the recent episode of stagflation left the economy in shambles. By this point in his career, Reagan was a fervent advocate of free enterprise, limited government, and free trade, the hallmarks that would later define his presidential legacy. He had read Friedman and Hayek and was a regular reader of Hazlitt and The Freeman. He clearly understood that protectionism would not bear fruit.
However, he also understood that understanding the economic realities of trade and translating them into a compelling political position are two very different tasks. Reagan's campaign addressed the issue of trade head-on. In their report “Reagan and Bush on the Issues,” they outlined a way to address the challenges facing U.S. manufacturing through market reforms. This approach is worth revisiting in light of President Donald Trump's second term and his embrace of protectionism, particularly tariffs, as a means of revitalizing U.S. industry.
Reagan's free-market approach began with an acknowledgment of the successes that free trade had brought to the US, something that is conspicuously absent from the current political debate. The campaign insisted (see below) that “international trade has increased substantially over the past two decades, contributing to improved living standards for all of our trading partners.” Trade provided “many of the luxuries we now enjoy and many of the necessities we need.” They recognized the importance of manufacturing for export, noting that “U.S. exports generate approximately one-sixth of our private-sector jobs.” Furthermore, they emphasized that “one of our best ways to promote economic growth in the future is to continue expanding our trade with other nations.”