Over the past few decades, support for freer trade has been a bipartisan priority in America. That there are benefits from removing impediments to international trade is one of the few areas where there is near-universal agreement among economists. Yet, anti-trade sentiment is rising in both parties—and Donald Trump is not alone among the remaining presidential candidates in his embrace of protectionist trade policies. In what follows, Duke University lecturer and international trade attorney Scott Lincicome explains why these politicians are wrong and economists are right when it comes to free trade.
Jared Meyer: You wrote an article for The Federalist titled “Almost Everything Donald Trump Says About Trade With China Is Wrong.” Is Trump’s misunderstanding of trade limited to his support for high import tariffs on Chinese goods and hatred of the U.S.-China trade deficit?
“The most fundamental error in Trump’s trade pitch is the idea that the American manufacturing sector is in decline, and that imports are to blame. The reality is broadly different.”
Scott Lincicome: It goes far beyond that. The most fundamental error in Trump’s trade pitch is the idea that the American manufacturing sector is in decline, and that imports are to blame. The reality is broadly different. Every legitimate measure of American manufacturing is up, and in terms of output and exports the sector continues to set records.
The only thing that has declined over the last several years for manufacturing is employment. But this decline started as a share of total American employment in the 1940s, and in sheer numbers in 1979. Both of these trends began long before the North American Free Trade Agreement (NAFTA) existed, or webegan trading with China. The vast majority of manufacturing job losses havenothing to do with trade. They come from productivity gains and changing consumer tastes.
When you combine all these factors, what you see is that Trump’s argument that“China killing our manufacturing sector” is simply false.
JM: What is the simplest way to explain why overall and country-specific trade deficits do not matter?
SL: It is to look at the data. Dating back several decades, what you see is as the trade deficit expands U.S. GDP growth also expands, as does U.S.manufacturing output. Both of these trends contradict the well-worn myth that the trade deficit is somehow a drag on the American economy or an indicator that the American manufacturing sector is suffering.
JM: Unions clearly benefit from protectionist trade policies. Are there any other special-interest groups that stand to gain from high U.S. import tariffs?
SL: Any time you actually look at who is making protectionist claims, with the very rare exception of dyed-in-the-wool protectionists, you see that they are typically representing Congressional districts that have a very large proportion of unionized workers in kind of “old-school” heavy industries. These are the folks who do not want global competition, and their elected representatives are more than willing to use any rhetorical tool that they can, including myths about the trade deficit.
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This piece originally appeared in Forbes