It's a disruptive, external shock to the global trading system… (But) I actually think that this [Trump's tariffs on aluminum and steel] will have positive effects in the long run. It makes people in the United States who have not stood up to support free trade much more anxious to do so now that they see the possible consequences of the benefits of free trade being taken away.
The United States can't keep a completely open system if the rest of the world is less open. The United States may have to take a leaf out of the book of Japan, China, and Germany, and have protectionism inside the system.
Our view is that these actions [Trump's tariffs] are necessary to defend this country, and that they are ultimately bullish for Corporate America, for the working men and women of America, and for the global trading system.
Protectionism is a very real danger. It is understandable that in times of a severe downturn protectionist pressures mount but the lessons of history are clear. If we give in to protectionist pressures, we will only send the world into a downward spiral.
Put differently, surpluses don’t arise because surplus countries can produce goods more productively or efficiently. They arise from the need to export domestic savings caused by the low household income share of GDP. Because surplus countries direct their excess savings mainly to the US, the only economy deep, flexible and open enough to absorb them, it is the US that must inevitably run capital ...See More
Any time you read that your government is erecting tariff barriers, supporting threatened industries with subsidies, or interfering in any way with free trade between individuals or nations, you must realize that your standard of living is being lowered as a result.
Many people who have lost out in the last few decades voted for Trump. Trump will have a difficult time turning them into winners. The jobs of these people are not at risk because of Chinese or Mexican workers, but because of robots and computers. And new trade barriers and higher tariffs are not going to change that.
The benefits of a tariff are visible. Union workers can see they are "protected". The harm which a tariff does is invisible. It's spread widely. There are people that don't have jobs because of tariffs but they don't know it.
We have to remember we're in a global economy. The purpose of fiscal stimulus is not simply to sustain activity in our national economies, but to help the global economy as well, and that's why it's so critical that measures in those packages avoid anything that smacks of protectionism.
Threats of trade protectionism, plus unilateral actions on the exchange-rate front, such as the heavy interventions of China, Japan, and Switzerland in the currency markets - not to mention the retaliatory tariffs recently passed by the U.S. House of Representatives - endanger growth prospects and could further depress financial market confidence.