Why Trump’s Trade Policy Could Backfire

That’s a new Foreign Affairs essay out today by Doug Irwin, Professor of Economics at Dartmouth College:

Although Trump’s professed goal is to “get a better deal” on trade, his brand of economic nationalism is just one step away from old-fashioned protectionism. The president claimed that “protection will lead to great prosperity and strength.” Yet the opposite is true. An “America first” trade policy would do nothing to create new manufacturing jobs or narrow the trade deficit, the gap between imports and exports. Instead, it risks triggering a global trade war that would prove damaging to all countries. A slide toward protectionism would also undermine the institutions that the United States has long worked to support, such as the World Trade Organization (WTO), which have made meaningful contributions to global peace and prosperity.

Continue reading →

That’s the title of my latest EconoFact memo.

Continue reading →

The Administration rolled out a new trade strategy yesterday (The President’s 2017 Trade Policy Agenda, part of this document). Like many things the Administration has put forward, it is heavy on rhetoric, light on policy specifics. That being said, if the Administration pursues a trade agenda that invites trade retaliation, while implementation of stimulative macro policies (e.g., infrastructure investment, tax cuts) are delayed, then we may very well get an economic slowdown before a boom.

Continue reading →

From Head and Mayer, “Brands in motion: How frictions shape multinational production”, an examination of how the auto industry fares if Nafta is terminated:

In the end-of-NAFTA scenario, depicted in orange in Figure 7, all three members reduce [auto] production.

Continue reading →