What a Choice: ‘Harmful’ Versus ‘Horribly Destructive’
A new report from the Peterson Institute for International Economics slams both U.S. major-party candidates for president for policies not supportive of expanding international trade and integration.
The report found that Republican candidate Donald Trump’s proposals on international trade, if implemented, “could unleash a trade war that would plunge the U.S. economy into recession and cost more than four-million private sector jobs.”
Hillary Clinton, the Democratic candidate, has expressed skepticism about trade but in effect represents the status quo, according to the report. Both candidates have come out against the Trans-Pacific Partnership (TPP) between the United States and 11 Pacific Rim countries, which President Barack Obama signed earlier in 2016.
Trump has proclaimed that he would “rip up” existing trade agreements, renegotiate the North American Free Trade Agreement (NAFTA), and impose a 35 percent tariff on imports from Mexico and a 45 percent tariff on imports from China.
“We call them as we see them,” wrote Adam S. Posen, the institute’s president, in an introduction to the report. “While Clinton’s stated trade policy would be harmful, Trump’s stated trade policy would be horribly destructive.”
The report found that if Trump raises tariffs sharply on China, Mexico, and other trading partners, export-dependent U.S. industries that manufacture machinery used to create capital goods in the information technology, aerospace, and engineering sectors would be the most severely affected. But the shock resulting from Trump’s proposed trade sanctions would also damage sectors not engaged directly in trade, such as wholesale and retail distribution, restaurants, and temporary employment agencies, particularly in regions where the most heavily affected goods are produced. Millions of American jobs that appear unconnected to international trade—disproportionately lower-skilled and lower-wage jobs—would be at risk, according to the empirical study included in the report.
A legal analysis contained in a separate chapter argues that, contrary to popular opinion, there is ample precedent and scope for a United States president to unilaterally raise tariffs as Trump has vowed to do as a centerpiece of his trade policy. Any effort to block Trump’s actions through the courts, or amend the authorizing statutes in Congress, would be difficult and time-consuming.
A separate chapter analyzes the impact of trade policies advocated by both Trump and Clinton on U.S. foreign policy interests. The abrogation of NAFTA, as Trump threatens, the report warns, would deliver a severe blow to Mexico’s economic and political development that could increase, not decrease, the flow of illegal migrants and drugs into the United States.
“Pulling out of the TPP,” the report concluded, “as both candidates promise to do, would weaken U.S. alliances in Asia and embolden its rivals, thus eroding U.S. national security.”
While the report criticizes the trade policies of both candidates, it does not pull any punches on who is worse for trade and its related economic and international relations issues. “Clinton’s proposed trade and international economic policies would damage American well-being, primarily but not solely due to her stated opposition to TPP and to further economic integration,” the report concluded. “The policies proposed by Trump are another matter altogether. His stated approach to the global economy of waging trade war and protecting uncompetitive special interests would be disastrous for American economic well-being and national security.”