PRESIDENT REAGAN was quite right to refuse to protect the shoemakers from imports. Trade is the one area in which the president's views about open markets and competition apply most convincingly and with fewest exceptions. Quotas on imported shoes would have amounted to a high but hidden tax on consumers for the benefit of a hapless industry that, even with protection in the past, has been unable to hold its markets. The right answer is, as Mr. Reagan said, government help in retraining and relocating the people who are being pushed out of their jobs by imports. The shoe industry is small enough to give that kind of assistance some hope of being effective.

But to most of Congress, the shoe industry was only a symbolic case to test the administration's attitudes toward trade protection in general. A very broad range of American industries is now under unprecedented pressure from imports, as the country runs trade deficits that are beyond anything in its experience. In response to this larger issue, the administration says that it will act more vigorously in cases of unfair trade.

That's fine, but Mr. Reagan is going to have to go well beyond the Japanese quotas on leather goods and Brazil's restrictions on U.S. computers. The basic unfairness -- the unfairness that looms above all the others, and affects all of American manufacturing industry -- is the inordinately high exchange rate of the dollar.

With the dollar's value in other currencies now 35 percent higher than its purchasing power in traded goods, the exchange rate is the equivalent of a tax of that amount on all American exports and a similar subsidy to all imports. That is the reason the American trade deficit has ballooned over the past two years. It is a consequence of the similar ballooning of the federal deficit and the central failure of this administration's economic strategy.

Two things about the trade deficit are clear. First, it can't run forever because it runs on borrowed money, and foreign lenders aren't going to keep lending indefinitely. Second, the trade deficit isn't going to fade away painlessly so long as American policy continues on its present track. There are many ways in which the trade deficit ultimately could resolve itself. The process could be benign and relatively easy, if this country were to take the initiative of reducing its present heavy dependence on money borrowed abroad. Other possibilities are more dangerous. It's truly dismaying that the Reagan administration has nothing to say on this subject, and refuses even to address it.

The real trade issue isn't shoes. It's the dollar. Protectionism won't help matters. Neither will ignoring it. You will know that the administration is beginning to deal seriously with unfair trade when you see it begin to deal with the overvalued dollar.