Contrary to Trump’s assertions, the global trading system has not been a colossal failure. Rather, it has been one of the great successes of the post-war era. Scores of studies have shown that international commerce has enriched the United States and its citizens, even as it has also integrated many newly developing countries into the global marketplace and thereby helped reduce the number of people living in abject poverty by hundreds of millions over the past half century. This is the opposite of a catastrophe.
America’s workers benefit immensely from access to goods and services made in other countries. On average, access to these goods provides a 29 percent increase in the purchasing power of the average American household. The 500 largest U.S. companies earn about half of their combined revenue from their international operations. The average U.S. worker earned $1,300 more annually over the past two decades owing to U.S. access to international markets.
Trump seems to think he can start a trade war and leaders in other countries will unilaterally disarm. The reality is that if the U.S. retreats from its leadership position on global trade, other countries will follow suit and give in to protectionist impulses too. We have seen this before in history, and the results have been tragic. There would be job losses in the U.S. and elsewhere, not job gains, and U.S. consumers would be forced to pay much more for the products they buy. Protectionism hits the poorest households the hardest because they are least able to handle the price increases that follow for food, clothing, and other essential goods.
A turn toward protectionism would be especially tragic because the U.S. has provided crucial global leadership on international trade for seven decades. Starting with the General Agreement on Tariffs and Trade (GATT) in 1948, U.S. trade policy under administrations of both parties has been a steady, long-term effort to lower barriers and provide a fair and level playing field for international commerce. There were 23 members of GATT in 1948, 128 as of 1994, and now 164 countries participate under the trading rules governed by the World Trade Organization (WTO). The U.S. also has separate free-trade agreements with another 20 countries.
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