NEW YORK – US President Donald Trump is about to make a policy mistake. It will hurt – particularly in the short run – countries across Sub-Saharan Africa, Latin America, and Asia, especially emerging economies like China and Sri Lanka (which run large trade surpluses vis-à-vis the United States) and India and the Philippines (major outsourcing destinations). But none will suffer more than the US itself.
The policy in question is a strange neoliberal protectionism – call it “neo-protectionism.” It is, on the one hand, an attempt to “save” domestic jobs by slapping tariffs on foreign goods, influencing exchange rates, restricting inflows of foreign workers, and creating disincentives for outsourcing. On the other hand, it involves neoliberal financial deregulation. This is not the way to help the US working class today.
American workers are facing major challenges. Though the US currently boasts a low unemployment rate of 4.8%, many people are working only part-time, and the labor-force participation rate (the share of the working-age population that is working or seeking work) has fallen from 67.3% in 2000 to 62.7% in January. Moreover, real wages have been largely stagnant for decades; the real median household income is the same today as it was in 1998. From 1973 to 2014, the income of the poorest 20% of households actually decreased slightly, even as the income of the richest 5% of households doubled.
One factor driving these trends has been the decline in manufacturing jobs. Greenville, South Carolina, is a case in point. Once known as the Textile Capital of the World, with 48,000 people employed in the industry in 1990, the city today has just 6,000 textile workers left.