What progressives like about Trump’s trade war

If President Trump has been clear on one thing, it’s that globalized trade is a raw deal for American workers.

Of course, most mainstream economists and commentators do not agree, to put it mildly. They see globalized trade as a win-win for everyone, and Trump’s “America First” agenda as myopic and destructive.

But our protectionist in chief is getting at least a little sympathy from one unlikely group: progressive economists.

That sympathy is complicated, and it doesn’t often translate into support for Trump’s specific policies. But after I spoke with several economists on the left and reviewed their recent writings, it became clear to me that many of them believe Trump actually gets a decent amount right on trade.

Many progressive economists broadly agree with Trump that America’s trade relationships with other countries are a dysfunctional mess — and that they’ve done serious damage to American workers.

“It would be deeply unwise to ignore the power of [Trump’s] message,” Heather Boushey and Todd Tucker — the chief economist at the Washington Center for Equitable Growth, and a political scientist at the Roosevelt Institute, respectively —recently wrote at Vox. They pointed to evidence that the start of global trade relations with China in 2000 decimated jobs and wages for blue-collar workers here in America.

Trump has responded to this reality with massive tariffs — something some progressive economists agree with, at least in principle.

“Tariffs are sorely needed to retaliate for theft of intellectual property, state-owned enterprises, overcapacity, and other forms of unfair trade, including more than a decade of massive currency manipulation,” Robert Scott of the Economic Policy Institute (EPI) told me.

Like Trump, many progressive wonks are deeply critical of the world’s free-trading order. Economists such as Dean Baker and Kevin Gallagher paint a picture in which modern global trade throws all the power to international corporations, allowing capital to move freely about the world, while bleeding the Western working class. Law professors Ganesh Sitaraman and Timothy Meyer, who often focus on international economic law, concur.

Many of these experts sharply attack the mainstream consensus that global trade liberalization has been a win-win for everyone. Baker points out that even textbook economic models merely say that winners win from trade more than losers lose. A win-win for everyone only happens if the winners then compensate the losers. But in practice, this never happens. Without that second step, …read more

Source:: The Week – Business

      

How Much Damage Will Trump’s Trade War Do?

Will Donald Trump’s trade war tip the economy into a recession?

It seems a reasonable question to ask. The White House has initiated a rapidly escalating global tit-for-tat, with thousands of products from the United States, China, Canada, Mexico, and Europe now affected or threatened by tariffs. The price of imported goods is increasing. The demand for exported goods is falling. American businesses are laying workers off, and some are warning that they might end up bankrupt.

In some sense, Trump could not have picked a better time to engage the country in a pointless, destructive round of mercantilism: The country’s pace of growth is so strong that the tariffs should have only a muted effect on headline GDP and jobs numbers, economists think. Still, certain industries and certain places stand to suffer considerably—and this growth-chilling trade war might be hard to call off in the event that the economy were to slow down.

The war is being fought on multiple fronts, and with several different justifications. Trump has taken aim at China for engaging in a variety of unfair market practices, including stealing American intellectual property. He has decried the North American Free Trade Agreement, shared with Mexico and Canada, arguing that it rips off American businesses. And he has said that the European Union’s trade practices are unfair, too. “They put up barriers so that we can’t sell our farm products in,” Trump said at a Minnesota rally last month. “Yet, they sell Mercedes and BMW, and the cars come in by the millions. And we hardly tax them at all.”

With the idea of aiding American businesses and punishing overseas trading partners, the White House has threatened or slapped tariffs on more than $200 billion of imported goods, leading to retaliation. Solar panels, jeans, motorcycles, pork, soybeans, steel, aluminum, cars, insect repellent, tilapia, lobsters, cranberries, cheese: The list of items caught in the crossfire is large and growing. That has forced more and more businesses to react. Some companies, like domestic commodity producers, have benefited from the tariffs. Others have said they would shift production overseas to avoid them, alter their supply chains to soften the impact, or start passing price increases onto consumers.

The effect on American growth stands to be small but noticeable, economists said. Paul Ashworth, the chief U.S. economist at Capital Economics, said he estimated the hit at 0.1 or …read more

Source:: The Atlantic – Best of