Economists strike back at the new political consensus on trade
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If you put a dozen economists in a room, you'll get at least a dozen points of view on most topics. One exception to the rule is tariffs: Economists nearly universally reject them as counterproductive and inefficient.
The big picture: Mainstream economic thought on the benefits of international trade is increasingly in the political wilderness. Former President Trump seeks to go all-in on tariffs if he returns to the White House. And the Biden administration has maintained Trump's earlier tariffs and expanded them in some areas.
- But advocates of the more traditional economists' views on trade are not going without a fight.
- In recent days, they've been making the case in increasingly vivid terms for what Americans gain from the global flow of goods — and what the barriers to that commerce really cost.
What they're saying: "The protectionism, trade wars, and industrial policies of the Trump-Pence and Biden-Harris administrations have provided an argument in favor of free trade," wrote Michael Strain of the American Enterprise Institute in a new paper.
- "Protectionism has not succeeded, even when measured against its own goals," he wrote in the piece published by the Aspen Economic Strategy Group. "Moreover, it often works against those same (misguided) goals."
- His analysis of Trump trade policies that have been largely continued by the Biden administration finds they did not interrupt a long-term trend of manufacturing employment falling as a share of total jobs.
Zoom out: In a new essay, Council on Foreign Relations president Michael Froman addresses the hidden costs of the Trump and Biden approaches toward commerce with China.
- "Resilience, redundancy, diversification, and national security are legitimate values to pursue," he wrote in Foreign Affairs. "But the goals of competitiveness, efficiency, and growth cannot be thrown out entirely."
- "No matter who is elected in November, the next president would be wise to draw clear lines on state support — deciding, for example, in which sectors the United States needs domestic production capacity and in which it can rely comfortably on neighbors and friends."
In a fiery essay out last week, Kimberly Clausing and Maurice Obstfeld of the Peterson Institute for International Economics wrote of the kinds of across-the-board tariffs Trump has proposed that the "siren song of such snake-oil solutions should be rejected."
The other side: They were responding to an essay in The Atlantic that made the case that economists are the ones who are shortsighted on trade.
- "Whether America should focus more on domestic or global prosperity, on the lowest possible prices or on long-term growth and industrial strength, are questions on which reasonable minds may differ," wrote Oren Cass, chief economist of the American Compass think tank.
- "They are not, however, questions that economists can answer. In fact, they are precisely the sorts of questions best left to politicians and the voters who elect them," he added.
Disclosure: Neil is a member of the Aspen Economic Strategy Group.
