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 Richmans' Trade and Taxes Blog

Peter Morici: Trump's Got It Right on Trade
Howard Richman, 1/30/2016

U. of Maryland economist Peter Morici, former chief economist at the USTR, endorsed Trump's trade plans, in a commentary this week. Here's how he begins:

Donald Trump has been savaged by economists and media aligned with establishment candidates for tough positions on trade — including a 45 percent tariff on imports to force China to the negotiating table.

Actually, he’s got it right.

Establishment Democrats and Republicans embrace free trade because it puts free markets first with benefits any decently trained economist should extoll. Unfortunately, trade with China and many nations is hardly market-driven.

It hurts U.S. growth and victimizes America’s families.

He estimates that just this year, the growth in the U.S. trade deficit with China cost by $25 billion cost an additional 200,000 U.S. jobs:

For all the talk of a faltering dragon, U.S. imports from China were up, exports down and the bilateral trade deficit increased nearly $25 billion in 2015 — killing 200,000 American jobs.

He concludes:

Overall, the U.S. trade deficit exceeds $500 billion a year and kills about 4 million jobs. Lost manufacturing takes a big bite out of R&D spending and that goes a long way toward explaining why growth is so disappointing and median family incomes are down $4000 since 2000.

Trump’s proposals for fixing trade — starting with China — address the salient issues of currency, trade barriers and subsidies. Those echo Mitt Romney’s 2012 platform — and candidate Obama in 2008 — but threaten entrenched interests in both the Republican and Democratic parties.

Trump is hardly reckless on trade — just a long needed agent for change.

Morici is a political moderate and a very sensible economist. I have been following his writing for years. It is always full of common sense. We share his hope that a Trump presidency would solve this serious economic problem.