President Trump’s Federal Reserve nominee Judy Shelton has long been a proponent of free trade and once advocated for an open border with Mexico, a clear contrast with the president who has focused on barriers at the southern border.
In the Wall Street Journal opinion piece “North America Doesn’t Need Borders,” Shelton wrote in 2000 that opening the U.S.-Mexico border is “steeped in pragmatism” and a “fulfillment of open markets.”
She argued easier movement of people across the border would ensure resources “whether human, financial or material, are more efficiently utilized in the interests of all market participants.” She held up the auto industry as a good example of how the flow of people, goods and ideas across the southern border has benefited all.
“American manufacturers already reap the benefit of low-cost production facilities in Mexico; as a result, our consumers pay lower prices for cars and other finished goods that can be sold tariff-free on U.S. soil,” she said at the time. Shelton also taught in Mexico for six years beginning in the late 1990s, when she was a visiting international finance professor at the DUXX Graduate School of Business in Monterrey, Mexico.
Shelton did not respond to a request for comment on what her views are about the U.S.-Mexico border today. Trump said Tuesday he planned to nominate Shelton for one of the two remaining seats on the Fed’s Board of Governors, part of his push to reshape the central bank and get it to lower interest rates ahead of the 2020 election.
A Fed nominee’s views on trade and migration have rarely been an issue in the past, but Trump’s trade war is a central focus right now for business leaders and Wall Street. Fed leaders are seriously contemplating cutting interest rates at their next meeting in July because they are worried about the trade war harming economic growth at home and abroad.
In an interview last month with The Post, Shelton hedged on the trade war. She described tariffs as “disruptive,” but added: “We had to have this battle with China.”
Shelton would not be the first free trader to get a top job from Trump. Larry Kudlow, the president’s top economic adviser and a longtime friend of Shelton’s, also has been an outspoken “free trader” who initially criticized Trump’s calls for tariffs but now says the president convinced him tariffs are a negotiating strategy. Trump’s prior Fed nominee, Stephen Moore, also fits this pattern.
“The anti-free trade sentiments are all trickling down from Trump,” said George Selgin, director of the Center for Monetary and Financial Alternatives at the Cato Institute, a libertarian think tank. “So if he’s okay with what she wrote about Mexico back then, I don’t think anyone else will raise it as a red flag on the Republican side.”
In recent weeks Shelton has stressed she wants to support Trump’s full economic agenda, including his trade policies.
“It’s okay to change your mind, but you owe it to Congress and the American people to explain your reasoning for why you changed other than that you want to be on the Fed. That’s not good enough,” said James Pethokoukis, a policy analyst at the American Enterprise Institute.
Still, Pethokoukis said he expects Republicans will confirm her for the role after she clarifies her views.
Critics of Shelton’s are urging Republican senators to vote against her because of fears she would politicize the Fed, which is supposed to make decisions independent of White House calls. Her recent calls for lower interest rates, which run contrary to her prior views, have heightened the concern.
But, Shelton told The Washington Post and other outlets she is her “own person” and noted she has a track record spanning more than three decades of being transparent in her opinions.
Trump’s threat to put hefty tariffs on Mexico last month spooked business leaders, causing corporate confidence to slump. Experts say it could turn out to be a blip, but there’s concern executives are starting to pare back on investment spending and hiring because of the ongoing uncertainty.
Trump also has called migration at the border a “national emergency,” and he threatened to shut down the border with Mexico unless the flow of central American migrants stopped. He has also repeatedly berated Mexico for stealing U.S. manufacturing jobs.