What would Trump-led protectionism mean for America?

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19 December
10:50
December
2016

If it means higher tariffs, if it means more non-tariff trade barriers, if it means increased tensions with our major trading partners - like China, and Mexico - if it means it’s tougher for immigrants to come into the country, skilled or unskilled, if it means that some of the undocumented have to leave the country, that’s all bad. Our economy will be diminished to an extent which would offset any benefit we get from tax reform or deregulation. 

"A strictly America-first approach isn’t realistic. It makes no sense, really."

A strictly America-first approach isn’t realistic. It makes no sense, really. American multinationals truly are multinationals, with operations everywhere – it’s not clear whether they’re American, European or Asian. Its hard to implement the ‘Make America Great Again’ slogan, because it’s really about the global economy, and all of us working together to make it succeed. 

Even if he just means to stop outsourcing, as with the Carrier transaction, that doesn’t sound like a winning strategy, certainly in the long run. It makes it less likely that American businesses will want to hire in the US, for fear that they can’t move. Its almost like when European policymakers make it difficult for companies to fire people – if you make it hard for companies to fire people, they’re not going to hire people. If we want more wealth, more income, more jobs 20 years from now, will that strategy get us there? The answer is no, and probably just the opposite. 

The Carrier deal was clearly good politics – good near-term politics, which made for good headlines. But that’s not a policy which will be successful. Whether he knows that remains to be seen. We’ll have to see who he puts in key positions – who is his US trade representative, who he appoints to the Fed. That’ll teach us whether his approach to these issues is more politics, or policy. 

"There’s a process, and a rule of law, and that’s what we should abide by. His unilateral, one-off ad-hoc approach will, I think, get us into trouble, and won’t be productive."

There are rules – WTO rules and trade rules which all countries have agreed to, and if you violate them, there’s a process for determining the penalty. And since China entered the WTO, there have been a number of actions taken by the US over trade practices – and in many of those cases penalties have been meted out, including higher tariffs. So there’s a process, and a rule of law, and that’s what we should abide by. His unilateral, one-off ad-hoc approach will, I think, get us into trouble, and won’t be productive.

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