CHANG | What’s in a Trade War?

Most trade decisions have hidden or understated effects, especially in the short-term. The litany of free trade agreements signed beginning in the 1970s meant very little to voters until recently, when the failure of free trade deals to re-distribute the wealth from international trade flows came to a tipping point. The dual economic threats of offshoring manufacturing jobs to countries with cheaper labor and lack of trade adjustment policies that compensate the losers of free trade resulted in voters’ willingness to support economic nationalism and protectionism. All of this, combined with high executive power over import restrictions and international trade, more generally have allowed President Trump to do what he does best: upset the international order while vaguely fulfilling promises to his base. Tariffs can essentially be viewed as an import tax.