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Trump Trade Policy a 'Big Loser,' Economists Say


Presumptive U.S. Republican presidential nominee Donald Trump talks tough on foreign policy and global trade, promising to make “America great again."

Among Trump’s headline-worthy promises: forcing Mexico to pay for a giant border wall and raising trade tariffs against China by nearly 50 percent.

China enjoys a huge trade surplus with the United States, which in 2015 bought a record $482 billion worth of Chinese-made goods. China, on the other hand, took in only $116 billion worth of U.S. exports. To correct the $366 billion trade deficit, Trump has proposed raising tariffs against China from about 1.5 percent right now to as much as 45 percent.

The real estate mogul has accused China of “robbing” the United States.

“We have a $500 billion trade deficit with China, and we're going to turn it around. And we have the cards. Don't forget: We're like the piggy bank that's being robbed. We have a lot of power with China,” Trump said.

It’s an attractive and bold proposal to some of the millions of Americans who have lost jobs to lower-paid workers in China. Labor organizations blame trade and globalization not only for the massive job losses, but also for contributing to lower pay and living standards in the United States. Even nonpartisan groups such as Public Citizen's Global Trade Watch say pending U.S. trade deals with Asia and Europe remain a big threat to American jobs, wages and patents.

FILE - Piles of steel pipes to be exported are seen in front of cranes at a port in Lianyungang, Jiangsu province, March 7, 2015.

FILE - Piles of steel pipes to be exported are seen in front of cranes at a port in Lianyungang, Jiangsu province, March 7, 2015.

Unrealistic ideas

Some Trump supporters think his ideas are so bold and so far outside the current orthodoxy that they just might work. But closer examination of Trump’s trade talk suggests otherwise. Trade policy expert and economics professor Gordon Hanson at the University of California-San Diego said Trump’s proposals are not rooted in economic reality.

“You can see why he does it politically, but the economic foundation for it, shockingly enough, isn’t there,” Hanson said.

Not only would a 45 percent tariff on Chinese goods be illegal under the World Trade Organization’s current laws, economists say the probable international retaliation could prove costly.

American economist C. Fred Bergsten, co-founder of the Peterson Institute for International Economics, recently penned a scathing review of Trump’s trade proposals, calling them a “big loser” for the United States.

Bergsten said his analysis suggested that "if you limit imports from a single country like China, those imports are going to be available in most cases from other countries." And if Americans could buy most of the products elsewhere, few U.S. jobs would be saved or restored, he said.

Former World Bank economist Chad Bown said a likely outcome would be an all-out trade war between the United States and China.

“China has shown over the last few years that in any instance that a country has imposed new trade barriers on its exports, it has responded in kind, whether legal or not," he said. "But even under what Donald Trump is proposing it would be legally authorized under the WTO’s rules to retaliate in kind.”

Even if China went along with a tax hike on U.S.-bound goods, Hanson said it would not bring back any of the manufacturing jobs lost to China.

FILE - Demonstrators picket before the possible arrival of undocumented migrants who may be processed at the Murrieta Border Patrol Station in Murrieta, California, July 4, 2014.

FILE - Demonstrators picket before the possible arrival of undocumented migrants who may be processed at the Murrieta Border Patrol Station in Murrieta, California, July 4, 2014.

Deportation damage

Neither would Trump’s plan to deport 11 million undocumented immigrants. Conservative Washington research organization American Action Forum said deporting illegal immigrants from the United States would shrink the economy by about 2 percent. That could prove disastrous for an economy that grew by only 2.4 percent last year.

Critics may be missing the point, said Trump, who says his economic policies are all about winning.

"You're going to look back and you're going to say, 'You know what? That's when we started winning again, when Trump took over,' and we're going to win, we're going to keep winning.”

But whether Trump’s plans for higher tariffs against the competition prove to be a win or not, Bown worries the damage may already be done.

“I suspect that trading partners would be less likely ... to negotiate with us because they would think we’re not going to live up to these rules that we signed up to in the first place,” he said.

From a global perspective, that would not be good for anyone.

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