Must-Read: Richard Baldwin: Trump’s Anachronistic Trade Strategy

Must-Read: Richard Baldwin: Trump’s Anachronistic Trade Strategy: “Trump has aggressively lashed out against globalization…

…appointed the famously protectionist trade litigator Robert Lighthizer to be US Trade Representative. And the other two members of his trade triumvirate – Commerce Secretary-designate Wilbur Ross and White House trade adviser Peter Navarro – are no less protectionist…. Many working- and middle-class Americans believe that free-trade agreements are why their incomes have stagnated over the past two decades. So Trump intends to provide them with “protection” by putting protectionists in charge….

Old-fashioned protectionism will not boost American industrial competitiveness even if it saves a few thousand jobs in sunset sectors…. Ripping up trade agreements and raising tariffs will do nothing to create new, high-paying factory jobs… [but] only inflict further harm on workers…. Twenty-first-century globalization is knowledge-led, not trade-led…. “Knowledge offshoring” is what has really changed the game….

If the Trump administration imposes tariffs, it will turn the US into a high-cost island for industrial inputs…. Instead, the US needs to restore its social contract so that its workers have a fair shot at sharing in the gains generated by global openness and automation…. Over the last two decades… globalization has continued, but the social contract has been torn up. Trump’s top priority should be to stitch it back together; but his trade advisers do not understand this…