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The Economic Consequences of Mr Trump
Author(s) -
Corden Max,
Garnaut Ross
Publication year - 2018
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/1467-8462.12295
Subject(s) - economics , balance of trade , rest (music) , commercial policy , economic policy , manufacturing sector , administration (probate law) , business , international economics , labour economics , international trade , political science , medicine , cardiology , law
The Trump administration has embarked upon two large economic policy initiatives at a time of full employment: increasing the budget deficit by cutting personal and corporate tax rates; and increasing protection, especially against countries with which the United States has bilateral trade deficits. These initiatives are meant to reduce trade deficits and increase employment and incomes in the US manufacturing sector. Economic analysis tells us that the result will be larger trade deficits, and weaker total tradeables, including manufacturing employment. There may or may not be a net gain for employment and incomes in those industries which have been the greatest beneficiaries of protection. Trump's protection policies will damage incomes in the United States and the rest of the world; the damage will be greater if other countries retaliate or emulate. Alternative policies that compensate losers from free trade would give better results.