Should-Read: Dani Rodrik: Trump’s Trade Gimmickry
Should-Read: Dani Rodrik: Trump’s Trade Gimmickry: “The imbalances and inequities generated by the global economy cannot be tackled by protecting a few politically well-connected industries, using manifestly ridiculous national security considerations as an excuse…
…Trump’s trade measures to date amount to small potatoes. In particular, they pale in comparison to the scale and scope of the protectionist policies of President Ronald Reagan’s administration in the 1980s. Reagan raised tariffs and tightened restrictions on a wide range of industries, including textiles, automobiles, motorcycles, steel, lumber, sugar, and electronics. He famously pressured Japan to accept “voluntary” restraints on car exports. He imposed 100% tariffs on selected Japanese electronics products when Japan allegedly failed to keep exported microchip prices high….
Trump’s protectionism may well have very different consequences; history need not repeat itself. For one thing, even though their overall impact remains limited, Trump’s trade restrictions have more of a unilateral, in-your-face quality…. The voluntary export restraints (VERs) of the 1980s in autos and steel, for example, were administered by the exporting countries. This allowed Japanese and European companies to collude in raising their export prices for the US market…. Another contrast with the Reagan-era measures is that we are living in a more advanced stage of globalization, and the problems that have accompanied it are greater….
A serious reform agenda would instead rein in the protection of drug companies and skilled professionals such as physicians… address concerns about social dumping and policy autonomy… target areas where the gains from trade are still very large, such as international worker mobility…. But it is in the domestic arena that the bulk of the work needs to be done. Repairing the domestic social contract requires a range of social, taxation, and innovation policies to lay the groundwork for a twenty-first-century version of the New Deal…