Trump’s new tricks of the trade may backfire
March 13, 2017
President Donald Trump was celebrated for his relatively calm and coherent speech to Congress on Feb. 28. The more restrained tone may be music to the ears of Americans weary from shrieking partisanship, but the protectionist nature of his proposed trade policy should alarm anyone concerned with maintaining a healthy standard of living, his own supporters included.
Trump isn’t usually one for toeing the party line. Though most Republicans share his stances on taxes and immigration, his proposal for massive deficit spending on infrastructure is a far cry from what we’ve come to expect from right of the aisle. Perhaps the most intriguing departure from Republican standard-bearers is Trump’s outspoken hostility toward international trade.
Lamenting the loss of manufacturing jobs in his speech to Congress, Trump suggested getting them back is simply a matter of erecting trade barriers, or tariffs. While the North American Free Trade Agreement has certainly played a role in the reorganization of global labor, it’s misleading to blame it for the loss of manufacturing jobs, which have been in a steady decline since the 1970s, according to Federal Reserve Economic Data, more than 20 years before NAFTA came to be.
Increased efficiency from gains in technology contributes to job losses more directly than international trade. If lost manufacturing jobs could be brought back, even the ones that wouldn’t already be replaced by automation would pale in comparison to the approximately five million jobs that depend on open trade between the U.S. and Mexico, according to a Nov. 4, 2016, report by the Wilson Center, a nonpartisan think tank.
The intricacies of international supply chains make it difficult to target specific trading partners without penalizing American sources of components or raw materials. Introducing tariffs on imports from Mexico and China wouldn’t just affect those countries, it would do harm to the American businesses contributing value to them. Wilson Center data from 2011 ascribes 40 percent of Mexican export value as produced within the United States. Not to mention, there’s nothing stopping foreign trading partners from reciprocating tariffs levied against them, which would raise the cost of living and could potentially lead to a disastrous all-out trade war.
In his speech to Congress, Trump cited Abraham Lincoln’s admonition in 1847 against abandoning “protective policy,” without acknowledging the different set of circumstances Lincoln confronted. As the world’s understanding of the benefits of trade have improved since then, so has global prosperity. By definition, countries don’t engage in trade that isn’t mutually beneficial. Foreign imports to the United States contribute to a lower cost of living, which frees up consumer spending for other industries, including domestic ones.
The Trumpian view of trade as a zero-sum game, in which one country must win and another must lose, is irreconcilable with America’s economic system. The Republicans should recognize this and reel him back because he’s not really looking for a fair trade: He longs for the United States to become a “winner” as opposed to the loser he perceives it to be.
Unfortunately, his preferred policy of closing the nation off to free trade would likely put the U.S. at a significant disadvantage for years to come.