Does Trump Make Sense on Trade?

Many voters link Donald Trump’s positions on immigration with his position on trade. Both are seen as generally nationalistic. However, while Trump’s views on immigration are generally sound (but for the fact that his proposals don’t go far enough), his anti-free trade rants are highly suspect. Paul quoted Trump in yesterday’s speech:

I have visited the cities and towns across America and seen the devastation caused by the trade policies of Bill and Hillary Clinton.

Hillary Clinton supported Bill Clinton’s disastrous NAFTA, just like she supported China’s entrance into the World Trade Organization. We’ve lost nearly one-third of our manufacturing jobs since these two Hillary-backed agreements were signed.

Our trade deficit with China soared 40% during Hillary Clinton’s time as Secretary of State — a disgraceful performance for which she should not be congratulated, but rather scorned.

Then she let China steal hundreds of billions of dollars in our intellectual property – a crime which is continuing to this day. Hillary Clinton gave China millions of our best jobs, and effectively let China completely rebuild itself.

It isn’t clear exactly what Trump would do about trade. He excoriates every trade agreement in history, seemingly, as being a bad deal for the U.S. Sometimes he sounds as though he wants to abolish trade altogether, although no one can deny, in principle, the desirability of free trade. The prosperity of the United States was largely founded, in the first instance, on being a vast free trade zone. Europeans realized that they needed freer trade in order to compete, and therefore established the Common Market after World War II. Trump may be right that one trade agreement or another might be undesirable; I have zero confidence in Barack Obama to negotiate the Trans-Pacific Partnership, for example. But Trump generally seems hostile to trade across the board, an irrational position.

A knowledgeable reader critiques Trump’s riffs on trade and the decline of American manufacturing with a vigor that Trump himself might envy:

The basic point that manufacturing output and value added, per capita even, hasn’t declined, indeed, has had excellent growth for 35 years, is made. But as important is (1) the mix: we don’t make low value-added trinkets and doodads that are very labor intensive; the dog collars are being made in, not even Taiwan anymore, but Bangladesh!; (2) there is a highly rationalized global supply chain for higher value-added durable (and production) goods, so making simple components in Mexico and assembling in Alabama can be highly advantageous in volume growth, market deepening and scale economies.

It is especially helpful to note that the Ford autos from Mexico will enter an export market — one that the U.S. regulatory regime of protectionism in this sector makes prohibitively expensive to export from here! Heckuva job, morons and UAW special interests. So let’s have Trump/Bernie do more like this so we can have autarky and everything will be swell like in 1954 when Ike liked it and America was GREAAAAAT!

Also, I’d like to see more typewriter…and buggy whips…

Bottom line? Their facts are 95% wrong. There is NO decline in manufacturing…except relative to all the other more valuable things we do! There has been a very slow decline in manufacturing employment, in absolute and relative terms, due much more so to automation and technology than imports, which has been ongoing for more than 35 years. It amounts to about 200,000 or so jobs per year…noise.

The exception is the low value added, relatively low growth, mass produced but labor intensive sectors–the bras and panties, for example. There is no comparative advantage for the U.S. to employ 1 million lower wage workers in this sector.

Sure, the affected workers may need some transition assistance, and there are regulatory and other barriers to adjustment. But in the whole scheme of things is it worth imposing protectionism and insane autarky on 150 million households for hopeless “protection” of fewer than 1% of that?

This stuff is always a narrow special interest crony deal, and the facts are not helpful to them.

Have at it in the comments!

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