If Donald Trump’s threats to rip up existing trade agreements and impose punitive 45% tariffs on goods from China and a similar 35% levy on products imported from Mexico were to be implemented they “could unleash a trade war that would plunge the U.S. economy into recession and cost more than 4 million private sector jobs,” according to a detailed analysis of the two candidates’ trade agendas.
The briefing released today by researchers at the non-partisan Peterson Institute for International Economics underscores how, even as the Republican nominee claims that his pledge to “Make America Great Again” would dramatically boost growth and create millions of jobs, most mainstream economists view his facile, populist nostrums as potentially hazardous economic quackery.
Although the report determines that Hillary Clinton’s purported opposition to the Trans-Pacific Partnership and further economic integration would be “harmful” to the economy, it “in effect represents stasis” and pales in comparison to the policies being advanced by Donald Trump, that PIIE President Adam Posen says are “another matter altogether”.
“His stated approach to the global economy of waging trade war and protecting uncompetitive special interests would be disastrous for American economic well-being and national security,” Posen states. “We call them as we see them: While Clinton’s stated trade policy would be harmful, Trump’s stated trade policy would be horribly destructive.”
A PIIE press release stated that: “The authors of the empirical assessment, Marcus Noland, Tyler Moran, and Sherman Robinson, extend a macroeconomic model from Moody’s Analytics and find that if Trump raises tariffs sharply on China, Mexico, and other trading partners, export-dependent US industries that manufacture machinery used to create capital goods in the information technology, aerospace, and engineering sectors would be the most severely affected. But the shock resulting from Trump’s proposed trade sanctions would also damage sectors not engaged directly in trade, such as wholesale and retail distribution, restaurants, and temporary employment agencies, particularly in regions where the most heavily affected goods are produced. Millions of American jobs that appear unconnected to international trade—disproportionately lower-skilled and lower-wage jobs—would be at risk, according to the empirical study.”
Heading off the arguments of those seeking assurance in the comforting notion that, if elected, Trump couldn’t actually carry out his threats, the study also features a legal analysis by former Georgetown professor and Director of Studies at the Council on Foreign Relations Gary Clyde Hufbauer concluding that “there is ample precedent and scope for a U.S. president to unilaterally raise tariffs as Trump has vowed to do as a centerpiece of his trade policy. Any effort to block Trump’s actions through the courts, or amend the authorizing statutes in Congress, would be difficult and time-consuming.”
Click here to download the report.
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