Lessons from History

Gordon Pape on Lessons from HistoryBy Gordon Pape, Editor and Publisher

Donald Trump says his number one priority is protecting American jobs and he doesn’t seen to care who gets hit as he pursues that goal.

He has threatened to impose heavy tariffs on imports from Mexico and China and punitive taxes on any U.S. company that shifts production to other countries and then tries to sell the finished product back into the States.

From everything he said before and after the election, it appears that the incoming President is determined to implement these isolationist policies when he takes office in January. But the realties of world trade may thwart him. The whole process of job protection via tariffs may end up being a global game of whack-a-mole.

Last Thursday, The Wall Street Journal published an insightful look by columnist Gregg Ip into the problems past Presidents have faced when they tried to use protectionism to protect U.S. industries. He cited the 1977 example of President Jimmy Carter imposing restrictions on the import of Japanese TV sets.

“The result? As Japanese sales went down, South Korea’s and Taiwan’s went up,” he wrote. “When those imports were restricted, imports from Mexico and Singapore went up.”

More recently, when President Obama imposed tariffs on the import of Chinese tires in 2009, shipments from that country dropped but imports from elsewhere went up. “The action saved at most 1,200 jobs, a study by the Peterson Institute for International Economics found, at a cost to consumers of $900,000 per job because of higher prices.”

What Mr. Trump should really focus on, says the author, is training workers to fill some of the 334,000 manufacturing jobs that are available right now. The President-elect has spoken about providing more money for enhanced job training, especially for veterans, but it has not been a high-profile priority to this point. Trade wars seem to play much better with his base, even though history had shown them to be not just unproductive but destructive.

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