The attitude taken by the new Trump administration in the United States to trade policy appears to foreshadow an increase in protectionism, with alleged actions by countries including Germany and China being singled out for particular criticism. Frontier’s latest bulletin considers whether there is justification for the administration’s claims, and what trade restrictions designed to promote growth in American manufacturing might herald both for these countries and the US itself.
The bulletin shows how historical trends in exports from China and Germany to the US provide little evidence to support to the claim that competition from these countries has disproportionately affected US markets. While there may be legitimate concerns about the distributional impacts of trade, and specifically the impact of global supply chains, the administration’s trade policy proposals do not constitute a suitable response. On the contrary, they are liable to be counterproductive from the perspective of the America’s own self-interest. It may be that the administration is less concerned by economy-wide impacts and more narrowly concerned with manufacturing activities in certain regions because of the political payoffs. But even from this very narrow perspective, trade restrictions are undesirable because they are likely to be self-defeating. On top of all that, trade restrictions are liable to create a host of systemic effects that adversely impact on international trade and the global economy.
Frontier regularly advises public and private sector organisations in the EU and beyond on issues relating to international trade.
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