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Trump and the trade deals

Trump and the trade deals
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According to his plan, to appear popular among an angry crowd with his populist ideologies, Trump had always argued against trade deals and claimed throughout his campaign that the middle class Americans are robbed by neo-liberal trade policies. He has termed NAFTA as the worst trade deal ever that takes American jobs away from their land and offers opportunities to sons of the foreign soil. He blames companies for shifting their manufacturing capabilities to foreign countries and sell the products back in the US. Despite the deal was initiated by George H.W. Bush, he accused the Clintons for the passage of the bill on January 1, 1994.

His stand against trade deals either explains his ignorance about economics or makes him an hypocrite that does the talking while following none of what he says. He bashes Ford for its manufacturing facility in Mexico and threatens to impose a 35% punitive tariff on the vehicles entering into the US from Mexico. This is possible if international trade happens in Trump’s little fancy world. The tariff cannot be levied as Mexico becomes a trading partner of the US, under NAFTA and even if such a tariff becomes possible, it would raise the price of cars and trucks manufactured in Mexico and make it costlier for the Americans to buy them. Thus, a 35% tariff on Ford would hurt the economy further than helping it prosper. What kind of complex trade policies would you get right from a presidential candidate who doesn’t get the very basic arithmetic of trade right?

On the other hand, Trump has his signature clothing ‘Donald J. Trump Collection’ made in Mexico and China. Let every piece of this clothing invite a 35% tariff while imported back to the United States. He has also made significant real estate investments in around more than 10 countries including Panama, Philippines, Turkey, Uruguay, India etc. The investments made in these foreign lands would have been very well used to create jobs in the American soil. But Trump preferred profit over the well being of his fellow Americans whom he has started caring about suddenly after his presidential campaign. Like any other businessman, Trump has enjoyed the benefits of any trade deal including the NAFTA and reaped the benefits of globalization. He is just blatantly shameless to advocate protectionist ideologies, as a trade deal mainly NAFTA is widely seen as an evil by American voters.

Trade deals are good for the participants when the parties involved keep corporate interests and greed away. No trade deal is a zero-sum game in which neither of the parties benefit disproportionately over the other. Trade deals are friendly agreements aimed at mutual cooperation and growth. Trump’s idea of trade paints an incorrect picture of such deals. The true enemy to the American middle class is not trade deals but corporate greed, which Trump is an epitome of. When he speaks against trade deals, he is still a greedy businessman of the corporate America. It is this corporate greed that works against the American public, but not the trade deals, as Trump suggests. The con artist treats the stage as a reality show to misguide people away from the truth. He is nowhere near the problem, as he seems and sounds with his populist ideology.

Trump sounds voicing his concern against this corporate greed when he speaks against trade deals, while holding a clear record of running businesses against American interests. In turn, he makes use of the anger among the average white American to isolate them from the rest of the community while championing none of their real causes. He is the very element of the problem the middle class America wants to fight against.

His arguments against NAFTA are incorrect. Either is his understanding of the concept of trade is limited or he cooks up facts to supports his cause. As opposed to his claims, NAFTA hasn’t favored Mexico when compared to the US. The US has added 31 million payroll jobs since 1994, the average hourly earnings are 43% higher than what it was in 1994 after adjusting to inflation, and the manufacturing output of the US is at an all time high. NAFTA has made American companies more competitive. Exports to Mexico support six million American jobs today and the employees working in export-related jobs are paid 10-15 % more than their counterparts in non-export related jobs.

It is true that 600,000 jobs have been lost to Mexico since 1994, but the number is very small when compared to the jobs voluntarily left by Americans. Out of a 135 million workforce, 4 to 6 million Americans leave their jobs voluntarily every month.

As per Trump’s idea of trade, if a country is exporting less and importing more, then it loses to its trading partner, which is a misguided understanding. The exports to Mexico by the US has gone up and this is mainly due to the increased standard of living of Mexicans, thanks to NAFTA. If Trump talks about renegotiating NAFTA to make America have a better deal, he should not say no to TPP, because that is what the TPP does.

Image Source: Vanityfair.com

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