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<div class="column"><p class=""><span style="font-size: 13.000000pt; font-family: 'ArialMT'; color: rgb(40.000000%, 40.000000%, 40.000000%)" class=""><a href="http://nyti.ms/1SCFhir" class="">http://nyti.ms/1SCFhir</a> </span></p>
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</div><div class=""><br class=""></div><div class=""><h1 itemprop="headline" id="story-heading" class="story-heading" style="font-size: 2.125rem; line-height: 2.375rem; font-style: italic; font-family: nyt-cheltenham, georgia, 'times new roman', times, serif; margin: 0px 0px 10px;">On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy</h1><div id="story-meta-footer" class="story-meta-footer" style="border-top-width: 1px; border-top-style: solid; border-top-color: rgb(226, 226, 226); padding-top: 2px; color: rgb(51, 51, 51); font-family: nyt-cheltenham, georgia, 'times new roman', times, serif; font-size: 16px;"><p class="byline-dateline" style="margin: 4px 45px 0px 0px; font-size: 1rem; line-height: 1.4375rem; font-family: georgia, 'times new roman', times, serif; float: left;"><span class="byline" itemprop="author creator" itemscope="" itemtype="http://schema.org/Person" itemid="http://topics.nytimes.com/top/reference/timestopics/people/a/binyamin_appelbaum/index.html" style="font-size: 0.6875rem; line-height: 0.75rem; font-weight: 700; font-family: nyt-cheltenham-sh, georgia, 'times new roman', times, serif;">By <a href="http://topics.nytimes.com/top/reference/timestopics/people/a/binyamin_appelbaum/index.html" title="More Articles by BINYAMIN APPELBAUM" style="text-decoration: none; color: rgb(0, 0, 0);" class=""><span class="byline-author" data-byline-name="BINYAMIN APPELBAUM" itemprop="name" data-twitter-handle="BCAppelbaum">BINYAMIN APPELBAUM</span></a></span><time class="dateline" datetime="2016-03-10" itemprop="datePublished" content="2016-03-10" style="font-size: 0.6875rem; line-height: 0.75rem; font-family: nyt-cheltenham-sh, georgia, 'times new roman', times, serif; color: rgb(0, 0, 0); margin-left: 12px;">MARCH 10, 2016</time></p><div class=""><br class=""></div><div class=""><br class=""></div><div class="">
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<div class="column"><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">WASHINGTON — </span><span style="font-size: 14.000000pt; font-family: 'Georgia'" class="">Donald J. Trump</span><span style="font-size: 14pt; font-family: Georgia;" class="">’s blistering critique of American trade policy
boils down to a simple equation: Foreigners are “killing us on trade” because
Americans spend much more on imports than the rest of the world spends on
American exports. China’s unbalanced trade with the United States, he said
Tuesday night, is “the greatest theft in the history of the world.”
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Add a few “whereins” and “whences” and that sentiment would conform nicely
to the worldview of the first Queen Elizabeth of 16th-century England, to the 17th-
century court of Louis XIV, or to Prussia’s Iron Chancellor, Otto von Bismarck, in
the 19th century. The great powers of bygone centuries subscribed to the economic
theory of mercantilism, “Wherein we must ever observe this rule: to sell more to
strangers yearly than we consume of theirs in value,” as its apostle, the East India
Company director Thomas Mun, wrote in the 1600s.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Now Mr. Trump is bringing mercantilism back. The New York billionaire is
challenging the last 200 years of economic orthodoxy that trade among nations is
good, and that more is better.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">He is well on his way to becoming the first Republican nominee in nearly a
century who has called for higher tariffs, or import taxes, as a broad defense
against low-cost imports. And there is a good chance he would face a Democratic
</span></p>
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<div class="column"><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">opponent, Hillary Clinton, who has expressed fewer reservations about trade,
inverting a longstanding political dynamic.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Among Republican standard-bearers, “There’s nobody since Hoover who
talked this way about trade,” said I.M. Destler, a public policy professor at the
University of Maryland and the author of “American Trade Politics,” a history. For
most of the last century, Mr. Destler said, such skepticism about trade had been
relegated to the fringes of the </span><span style="font-size: 14.000000pt; font-family: 'Georgia'" class="">Republican Party</span><span style="font-size: 14pt; font-family: Georgia;" class="">.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Mr. Trump’s mercantilism is among his oldest and steadiest public positions.
Since at least the 1980s, he has described trade as a zero-sum game in which
countries lose by paying for imports. The trade deficit with China, which reached
$366 billion last year, makes America the biggest loser. “Our trade deficit with
China is like having a business that continues to lose money every single year,” Mr.
Trump told The New York Daily News in August. “Who would do business like
that?”
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">During the current campaign he has regularly advocated tariffs as the best
solution.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">He has promised to penalize American companies that build foreign factories.
For months his favored example was Ford, which announced plans last summer to
expand in Mexico. More recently he has called out Carrier, which is shifting air-
conditioner production from Indiana to Mexico.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">“I will call the head of Carrier and I will say, ‘I hope you enjoy your new
building,’” Mr. Trump said last month. “‘I hope you enjoy Mexico. Here’s the story,
folks: Every single air-conditioning unit that you build and send across our border
— you’re going to pay a 35 percent tax on that unit.’”
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">In January, Mr. Trump </span><span style="font-size: 14.000000pt; font-family: 'Georgia'" class="">proposed a 45 percent tariff on Chinese imports </span><span style="font-size: 14pt; font-family: Georgia;" class="">during
a meeting with The New York Times editorial board. “I would tax China on
products coming in,” he said. “I would do a tariff, yes.”
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Economists have long struggled against the popular view that exports are a
measure of economic vitality while imports are evidence of regrettable dependence.
</span></p>
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<div class="column"><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">They argue that the opposite is true.
</span></p>
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<div class="column"><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">“Economists have spoken with almost one voice for some 200 years,” the
famous economist Milton Friedman </span><span style="font-size: 14.000000pt; font-family: 'Georgia'" class="">said in a 1978 speech</span><span style="font-size: 14pt; font-family: Georgia;" class="">. “The gain from foreign
trade is what we import. What we export is the cost of getting those imports. And
the proper objective for a nation, as Adam Smith put it, is to arrange things so we
get as large a volume of imports as possible for as small a volume of exports as
possible.”
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">But critiques like Mr. Trump’s resonate in part because economists have
oversold their case. Trade has a downside and, while the benefits of trade are
broadly distributed, </span><span style="font-size: 14.000000pt; font-family: 'Georgia'" class="">the costs are often concentrated</span><span style="font-size: 14pt; font-family: Georgia;" class="">. Everyone can buy a cheaper
air-conditioner when Carrier disembarks for a lower-cost country, but a few
hundred people will lose their livelihoods.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Pietra Rivoli, a finance professor at Georgetown University who explored the
impact of increased globalization in her 2005 book, “The Travels of a T-Shirt in the
Global Economy,” said Mr. Trump may be finding a receptive audience in part
because the United States has provided relatively little help to workers harmed by
trade.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">“You have much more negative sentiment about trade in the U.S. than you do
in pretty much any other wealthy country, and they’ve lost their T-shirt jobs, too,”
Ms. Rivoli said. “What’s going on there is that in those countries — which are even
more exposed to trade than we are — those countries have a bigger safety net.”
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Mr. Trump has also accused other nations, notably Japan and China, of
cheating by suppressing the value of their currencies to make their exports
cheaper.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">“I am all for free trade, but it’s got to be fair,” Mr. Trump has said repeatedly.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Economists persuaded governments to abandon mercantilism by
demonstrating that trade barriers impose higher prices on the masses while
narrowly benefiting those sheltered from competition. The United States largely
dismantled its broad tariffs in the mid-20th century, opening the modern era of
globalization. But some tariffs remain, providing a reminder of the costs and
benefits.
</span></p>
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<div class="column"><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Annual imports of Chinese tires increased to 46 million in 2008 from 15
million in 2004, and American tire makers shed several thousands of jobs. So the
Obama administration, at the urging of workers’ unions, in 2009 imposed a
Trump-like tariff beginning at 35 percent and expiring after three years.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">“Over a thousand Americans are working today because we stopped a surge in
Chinese tires,” President Obama said in his 2012 </span><span style="font-size: 14.000000pt; font-family: 'Georgia'" class="">State of the Union address</span><span style="font-size: 14pt; font-family: Georgia;" class="">.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">The measure, however, also increased the amount that Americans spent on
tires by about $1.1 billion, </span><span style="font-size: 14.000000pt; font-family: 'Georgia'" class="">according to calculations by Gary Clyde Hufbauer </span><span style="font-size: 14pt; font-family: Georgia;" class="">of the
Peterson Institute for International Economics. That money, had it been spent on
other things, would have supported jobs in other parts of the economy.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">China, moreover, retaliated by slapping a punitive tariff on American chicken
parts — China is a particularly lucrative market for chicken feet — which cost
American poultry exporters about $1 billion in lost sales over the same period.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">Eswar Prasad, a Cornell University economist, said Mr. Trump is raising
legitimate concerns. Other nations do impose disproportionate restrictions on
American goods, he said. The problem, Mr. Prasad said, is the proposed solution.
</span></p><p class=""><span style="font-size: 14pt; font-family: Georgia;" class="">“It might be that the threat of tariffs or other trade sanctions could cause
American trading partners to open up their markets or drop their barriers to
trade,” Mr. Prasad said. “Perhaps as a bargaining chip it’s not necessarily so bad.
But there is a risk that rather than having that positive effect it leads to retaliation
on both sides.”
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