America’s Dangerous Neo-Protectionism
Donald Trump has promised to save US jobs by slapping import tariffs on foreign goods, influencing exchange rates, restricting inflows of foreign workers, and creating disincentives for outsourcing. But, while the US working class is undoubtedly facing major challenges today, protectionism is not the way to help them.
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.