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The author served as the US trade representative during the Trump administration
Skeptics of Donald Trump’s tariff proposals often argue that they will lead to inflation and negatively impact the economy. However, the absence of such consequences during Trump’s first term, when tariffs were increased, casts doubt on these criticisms. Moreover, the problems with these arguments run deeper. Critics fail to acknowledge the detrimental effects of the free trade model they have championed on America and its workforce over the past three decades.
Over the years, millions of jobs, particularly well-paying manufacturing positions, have been lost. Median wages have remained stagnant, except for a brief period under Trump’s presidency. Communities across the country have suffered, with high school graduates living significantly shorter lives on average compared to college-educated individuals.
Income and wealth inequality have reached unprecedented levels in the US, with the top 1% now possessing more wealth than the middle 60%. Trade deficits have ballooned, transferring trillions of dollars overseas in exchange for immediate consumption. Foreign ownership of American assets has soared, surpassing $22 trillion more than what Americans own globally.
The decline in manufacturing has also hampered innovation, with key industries like nuclear, electronics, textiles, and chemicals being lost. The US lags behind China in critical technologies, signaling a concerning trend in innovation. Economic growth has slowed significantly, with only a few instances of growth exceeding 3% since 2000.
The current trade system is a major contributor to these issues. Traditional economic theories on free trade do not align with the modern reality of industrial policies aimed at boosting exports and gaining a competitive edge. Countries with large trade surpluses engage in protectionist practices, while those with deficits, like the US, suffer the consequences.
Amid a failing trade system, Trump has advocated for actions to restore fairness and balance. Measures such as import/export certificates, capital access fees on inbound investment, and tariffs to counter unfair industrial policies have shown positive results during his previous administration. It is time for a change to address the harm caused by unfair trade practices.