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BUSINESS A25
Monday 14 March 2016
Would Trump’s trade threats work? Many experts are skeptical
PAUL WISEMAN Americans and cause dip- raised tariffs on imports, in-
AP Economics Writer lomatic havoc. Economists flamed trade tensions and
WASHINGTON (AP) — Don- recall that the 1930 Smoot- worsened the Great De-
ald Trump has promised Hawley legislation, which pression.
to shred America’s trade
deals and impose fines on In this Wednesday, March 2, 2016, file photo, Indiana Gov. Mike
imports from Mexico and
China. He’s gone so far as Pence speaks at a news conference at the Statehouse in India-
to swear off Oreos to pro-
test Nabisco’s transfer of napolis, on the decision of Carrier to move jobs out of Indiana
cookie production from
Chicago to Mexico. to Mexico. Associated Press
By attacking trade agree-
ments, the Republican base. Trade deals usually jobs. If it refused, he said he
presidential front-runner have little overall effect would impose a tax on any-
is channeling the belief, on jobs — positive or neg- thing the company built in
common among many ative — partly because Mexico and exported to
of this year’s angry voters, the American economy the United States.
that foreign competition is already open to foreign Trump also said he would
is robbing American jobs competition. Bigger forces tax auto imports from Mex-
and shrinking wages. such as huge wage gaps ico to stop U.S. automakers
“We’re being killed on between the United States from moving production
trade — absolutely de- and developing countries, there.
stroyed,” Trump says. and automation that lets
His assault on trade deals companies replace work- EASIER SAID THAN DONE
— which in some ways ers, play a much larger role Levying those tariffs would
echoes arguments of in job losses. “We’re run- probably require congres-
Democratic candidate ning large trade deficits, sional approval. It would
Bernie Sanders — seems and those do cost us jobs,” violate commitments the
to be winning politics. But says C. Fred Bergsten, di- United States made when it
Trump’s analysis of how rector emeritus of the Pe- joined the North American
trade hurts American work- terson Institute for Interna- Free Trade Agreement in
ers is flawed, and as presi- tional Economics. “Almost 1994, and the tariffs would
dent, he would struggle to none of that can be traced trigger retaliation from
deliver on his promises. to trade agreements, bad, Mexico. No problem, Trump
The United States does good or otherwise. Trade says. He’d rip up NAFTA. He
have an unbalanced trade agreements always have a could exit the agreement
relationship with other na- small net effect on jobs.” provided he gave Mexico
tions. Last year, it imported Economists at the Peterson and Canada six months’
$2.76 trillion in goods and Institute think the Trans-Pa- notice. Experts differ on
services and exported just cific Partnership, a pending whether Congress would
$2.22 trillion. That $540 bil- deal involving the United have to authorize this.
lion gap — the trade deficit States and 11 Pacific Rim Regardless, leaving NAFTA
— was the seventh-biggest countries, would barely would cause chaos for
on record. Not since 1975 affect American employ- businesses that have ar-
has the United States run a ment. Jobs created by ranged their operations
trade surplus. greater access to Asia-Pa- around its rules.
A trade deficit slows eco- cific markets would likely Trump has threatened to hit
nomic growth and can be offset by jobs lost. Chinese imports with a 45
cost jobs. Last year, the U.S. Just behind inept negotia- percent tariff. But in Thurs-
trade gap shrank growth tors on Trump’s list of those day’s Republican debate,
by 0.6 percentage point to responsible for America’s he suggested that the tax
a modest 2.4 percent. trade problems are busi- might be negotiable.
Trump, author of the 1987 nesses that move opera- “The 45 percent is a threat
best-seller “The Art of the tions abroad to capitalize if they don’t behave, if they
Deal,” argues that Ameri- on cheaper labor. don’t follow the rules and
can negotiators are snook- Trump pledged to give up regulations so that we can
ered by smarter deal-mak- Oreos after Nabisco’s par- have it equal on both sides,
ers in China, Mexico and ent, Mondelez Internation- we will tax you,” he said on
Japan who manage to al, said it would replace stage.
penetrate the U.S. market nine production lines in Chi- If Trump replaced the low
without granting equal ac- cago with four in Mexico. tariffs provided by NAFTA
cess to their own. He and He also said he would de- and World Trade Organi-
his team, which he has said mand that United Technol- zation rules with punitive
would include corporate ogies reverse a decision to tariffs on Mexican and Chi-
takeover artist Carl Icahn, move two Indiana plants to nese goods, he probably
could easily do better, he Mexico, eliminating 2,100 would ignite a trade war
says. that would raise prices for
An assessment of his trade
case:
LITTLE EFFECT ON JOBS
Many economists call
Trump’s arguments off-
