Could 2018 be World Trade Year?
May is “World Trade Month.”
Normally, it would be marked by a flurry of activity from groups like NRF that fight to tear down barriers to international trade but would go little noticed in the media and elsewhere. But this year is different. With the United States and China moving toward a trade war, the White House threatening to pull out of the North American Free Trade Agreement and President Trump saying he might want back into the Transpacific Partnership (after pulling out last year), trade is suddenly one of the biggest headlines in the news.
World Trade Month? This could be World Trade Year.
There’s always a lot at stake with trade, but the stakes are even higher this year.
The administration proposed tariffs on $50 billion worth of Chinese products this spring, and China responded with plans for tariffs on an equal amount of U.S. goods. The White House then said it would consider tariffs on another $100 billion in Chinese imports.
Clothing, shoes, toys and furniture were spared from the initial round, but appliances and televisions were included. And a study done for NRF and the Consumer Technology Association found the tariffs would drive up the cost of televisions 23 percent, costing shoppers $711 million annually.
Another study for NRF and other retail groups shows pulling out of NAFTA would increase prices for products from Mexico and Canada by $5.3 billion while reducing retailers’ bottom lines by $16 billion a year and costing 128,000 retail jobs over three years.
And a study from the Trade Partnership — a longtime consultant to NRF — shows trade supported 36 million U.S. jobs in 2016, or two and a half times as many as before NAFTA. That includes 11 million NAFTA-related jobs and 7 million tied to China.
The tariffs have been prompted by China’s violations of intellectual property rights. NRF agrees that needs to be addressed, but does not believe broad-based tariffs that drive up consumer prices and cost American jobs will resolve the problem.
By contrast, joining TPP would reduce trade barriers around the Pacific Rim and leverage trade with those countries to lessen China’s influence over the U.S. economy. Modernizing digital trade and other outdated provisions of NAFTA — but not scrapping it — would allow the deal to continue creating jobs and reducing the prices of both consumer products and raw materials needed by U.S. factories.
Trump says reducing imports would create more demand for U.S. products and create jobs. But most products involved are no longer made in the United States, and even if new factories were built they would be highly automated and require relatively few workers.
World trade cannot be sufficiently addressed by setting aside a single day, week or month each year. The question in 2018 is whether even a full year will be enough to convince policymakers that protectionism is a failed policy and that free and open trade is the path to prosperity.
The United States needs a 21st century trade policy that would not only improve American families’ standard of living but also create more American jobs.
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