What Will Trump Trade Policy Be?
Q: How hard will it be for Trump to produce jobs for the people he promised he would?
A: Fiscal expansion might rescue Trump by creating a high-pressure economy, if we are still far from full employment. Otherwise...
Bad trade deals are not the reason for the decline in American manufacturing employment and the stagnation of earnings outside the 10%.
Threats to somehow "renegotiate" NAFTA and China's accession to the WTO--how do you "renegotiate" China's accession to the WTO? Do you threaten to withdraw from the WTO yourself? It's completely unclear how this is supposed to be accomplished.
That makes it likely that in the end Trump will do nothing but attempt to declare a symbolic victory of some sort or other.
But, of course, that could be wrong: that assumes that the Trump administration will have some sort of semi-rational decision process. That's not a given. The George W. Bush administration certainly did not have one.
Trade wars could be one of the random policies that emerges and gets implemented, even though raising the prices that many of his core supporters pay for the goods they buy at Walmart is a very odd way of serving their interests.
Starting a trade war should be nixed because it is such a clear and easy road to disillusioning his coalition. But does Trump or anybody around Trump think that many moves down the game tree? I do not think so.
