The New Consensus on Trade Is Wrong and Dangerous
The populist left and populist right are now closely aligned in their support for protectionism. Good luck with that.
Your tariffs at work.
Photographer: LdF/E+/Getty Images
One of the most enduring fallacies in politicians’ talk about economics is the idea that trade deficits are a problem in their own right, regardless of why and how they arise. If you’re importing more than you’re exporting, goes the argument, you’re a loser – and the key to success in economic policy is to attack this imbalance. In the US, the populist left and the populist right are now closely aligned in their support for this nonsense.
It’s dangerous as well as tiresome. The measures meant to cut trade deficits invariably fail, but not harmlessly: They also cause collateral damage. Republicans and Democrats have come to support an expansive range of protectionist policies. As countless times before, these self-defeating initiatives will end up proving the point.