Watching all the political chatter, one cannot help but be struck by the fact that the ideological left and the Trumpian right agree that trade is a bad thing. Pundits are speculating that the consensus that has supported international trade is fading. Mr. Trump, in particular, promises to undo the NAFTA agreement with Mexico and Canada, and impose steep duties on goods made in China.
Here’s what would happen:
–the American auto industry is built on a continental scale, sourcing parts and complete models from both Canada and Mexico. If the underpinning treaty were to go away, production at most American auto plants would halt. Dealers of American autos would be deprived of new inventory.
–Americans would not be able to buy their iPhones. Imagine the sound and the fury. All of Apple’s iPhones are made in China by a third party, Foxconn. In fact, not a single piece of consumer electronics is made in America. The old RCA plant in Bloomington, Indiana, which I visited in its dying days, was the last one. It was closed in 1998.
–Home Depot, WalMart, Lowe’s and every other major retailer would have to either raise prices by 40 percent to cover Trump’s “tax” or no longer import items from China. Their shelves would run out of merchandise. Sure, some production has shifted to Vietnam and elsewhere in Asia. But the preponderance of the things American consumers buy still comes from China.
In other words, any sudden effort to undo or fundamentally change the trade agreements in place would have devastating impact on the heart of the American economy. We have been on a steady pace of “globalization” since the Marshall Plan. Ronald Reagan accelerated it. This situation has been developing for decades.
Is the new Trans Pacific Partnership a good idea? On pure economic grounds, the jury is out. A stronger case can be made that the United States needs it to reassure its Asian allies that they can stand strong with Uncle Sam against an expansionist Beijing.
The conversation we are not having with each other is that to make any kind of trade work, we need to understand that yes, some Americans lose. Other Americans gain. The ones who lose are the ones who lose jobs and cannot find new ones. We have done a terrible job with our education system and our retraining system. It is indeed possible to embrace relatively free trade if at the same time we improve the skills sets of our workers and continue to drive into new industries that we dominate on the world stage.
I think the reason our political leaders are not explaining that is because it is not popular. It suggests that Americans have to keep learning. And somehow that is un-American.
