I will be listening for educated views on whether trade with China or Mexico is good for the U.S., and whether steep tariffs like the 45% Donald Trump proposes for Chinese imports are the answer.
As an economist, I know that such simplistic ideas can have drastic unintended consequences. Even though, in the last decade, U.S. has lost millions of jobs – still a small fraction of U.S. total employment - due to import competition from China, most economists would say that restricting trade is not the answer. Gains from trade outweigh by far the economic losses. Moreover, other members in the World Trade Organization could retaliate against our exports if we impose punitive tariffs, destroying jobs in American exporting sectors. Any future job losses from trade agreements – like those experienced when China joined the World Trade Organization – can be better planned by a more-gradual opening to trade or by designing policies such as stronger safety nets to address the needs of workers dislocated by trade.
Also, voters should be wary of trade, offshoring and immigration being blamed for increasing income inequality in the U.S. In the U.S., the advancement of technology is the driving factor for the rise in income inequality. A solution to this problem is not to reverse the trends in technological advancement or globalization, but rather educate workers so that they can find jobs in the new economy.