Protectionist trade policies would throw the U.S. economy into turmoil and lead to the loss of millions of middle-class jobs, a new report said on Monday.
The Progressive Policy Institute (PPI) concluded that trade policies that cut off the United States from the global economy would do more harm than good in boosting job creation and wages for the majority of Americans.
“We explain why protectionist policies that supporters claim will 'bring back' American jobs would, instead, likely throw America into an economic tailspin and destroy millions of good middle-class jobs in manufacturing, services and farming,” said Ed Gerwin, the report’s author and director of the Trade and Global Opportunity Project at PPI.
“We also note that these policies would do nothing to help the vast majority of U.S. workers whose jobs are threatened not by trade, but by a complex combination of technological change, greater productivity and low skills,” Gerwin said.
Gerwin said the report provides a much broader context for a discussion of trade and jobs beyond the election-year politics that has injected serious doubts into the future direction of U.S. trade policy.
President Obama wants Congress to consider the Trans-Pacific Partnership (TPP) this year, a sell made tougher with both the Republican and Democratic presidential candidates standing opposed.
During the campaign, Republican Donald TrumpDonald TrumpJan. 6 committee chair says panel will issue a 'good number' of additional subpoenas Overnight Defense & National Security — Presented by AM General — Pentagon officials prepare for grilling Biden nominates head of Africa CDC to lead global AIDS response MORE and former Democratic presidential candidate Bernie SandersBernie SandersDo progressives prefer Trump to compromise? Texas House Republican tests positive for coronavirus in latest breakthrough case In defense of share buybacks MORE joined other critics in slamming U.S. trade policy, arguing that global agreements benefit corporate elites and leave behind millions of American workers.
"Trade skeptics charge that America’s pursuit of rules-based, open trade is essentially an exercise that’s by and for big multinationals and the Wall Street 1 percent, while leaving everyday American workers holding the bag," the report said.
"Critics like Donald Trump and Bernie Sanders claim that Americans would be better served by upending trade pacts like NAFTA [North American Free Trade Agreement], scrapping proposed deals like the TPP and jacking up tariffs, including Trump’s proposed duties of 45 percent on Chinese imports and 35 percent on goods from Mexico," the report said.
"These tactics, they argue, would pressure trade partners and U.S. multinationals and “bring back” American jobs."
Instead, the report says, poorly constructed protectionist proposals like leaving NAFTA or slapping high tariffs on imports from countries like Mexico or China "would severely impact millions of Americans whose livelihoods depend on trade and global supply chains."
The report argues that trade is often a convenient scapegoat for much broader economic dislocations that are "primarily caused by other factors, especially increasing productivity and advancements in technology."
Economists estimate that 41 million U.S. workers — more than one-in-five employed Americans — work in jobs that depend on international trade and that trade is a net plus for the economy.
Trade initiatives like the TPP can play an important supportive role — creating opportunities for U.S. workers by opening growing foreign markets and raising standards in TPP countries, the report said.
The report said that a deal like the TPP would boost wages for skilled and unskilled U.S. workers by an estimated $77 billion over its first five years.
"Americans are conflicted about trade. Strong majorities of voters, including Democrats, swing voters, Clinton and Sanders voters, and millennials, as well as many Republicans, believe that trade and trade agreements are vital and valuable for the U.S. economy," the report said.
"At the same time, large numbers of voters admit that they still don’t know enough about trade and trade proposals like TPP and, especially, their effects of U.S. jobs."
The report also urges policymakers to tackle the challenges spurred by expanding trade by pursuing policy solutions that improve worker training and promote greater worker mobility.
"New trade initiatives can support broader, comprehensive, pro-growth reforms in helping many more," the report said.
"But to reach this potential, supporters of open trade must push back against rhetoric about “the elites” and redouble their efforts to tell positive, inclusive stories about trade’s many benefits, especially its significant role in supporting good jobs for American workers."