Trump's Trade Fallacies
By David Henderson
At times, one senses that Trump just dislikes trade, period, whether “fair” or not. In that same July 2015 Las Vegas speech, Trump said: “I just left Los Angeles, thousands of cars, millions of cars coming in [from Japan]. We get nothing. We get cars. They get . . . We want to send rice, we want to send corn. . . . The imbalance of these things. They send a car. We send corn.”
So which is it? Do we send corn or don’t we send corn? And are cars “nothing”? And, if we do send corn, what’s wrong with that? Objecting to producing corn in the United States, where it’s cheaper to produce than in Japan, in return for cars that are cheaper to produce there than here–if they weren’t cheaper, we wouldn’t buy them–is to object to trade per se.
A major part of the problem Trump has with trade, I believe, is that he sees it as a zero-sum game, as in sports. He often talks about how we’re not “winning” in trade. And if we win more, in his view, China will win less. In a speech in the early 1990s in which he criticized the North American Free Trade Agreement (NAFTA), Trump said that Mexican businesses favored NAFTA, and that must mean that U.S. businesses would lose. What he fails to understand–and, again, he is not alone–is that in any trade, both sides win, or else they wouldn’t trade.
This is from David R. Henderson, “Trump’s Trade Fallacies,” Defining Ideas, June 7, 2016.
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