The Trump Policy that Will ‘Shrink the Economy and Make the US Poorer’
President-elect Donald Trump’s anti-trade rhetoric has proven that bad economics can make good politics. Fortunately, after Mr. Trump assumes office his trade policies likely will be better than his campaign rhetoric.
Many factors contributed to Trump’s victory. His upset wins in the so-called ‘Rust Belt’ states, which are typically Democratic strongholds, can be linked to his promise to revive U.S. manufacturing by restricting “unfair” trade with Mexico, China and other countries.
This promise resonated well with union workers. Trump won the union vote in Ohio, tied Clinton among union households in Michigan, and narrowly lost the union vote in Wisconsin by 8 percentage points – a huge improvement over 2012 Republican candidate Mitt Romney.
The reason Mr. Trump’s rhetoric on trade resonated with so many blue collar voters is because they believe a popular fallacy: that foreign trade destroys U.S. jobs.
According to exit polls, 50 percent of voters in Wisconsin and Michigan agreed with the notion that international trade kills American jobs. Similarly, 53 percent of Pennsylvanian voters and 48 percent of Ohio voters bought into this fallacy. Among the voters in the four states who expressed agreement with the trade fallacy, Trump’s support ranged from 59 percent in Michigan to 67 percent in Ohio.
Yet, as any trade economist understands, the truth is that trade neither creates nor destroys jobs.
Read the rest at the Independent Institute.
