Rising trade tension represents a major risk to the US and global economic outlook. Since 2017, the United States (Aaa stable) has withdrawn from the Trans-Pacific Partnership (TPP) and imposed tariffs on washing machines, solar panels, steel, and aluminum. The US continues to renegotiate the North American Free Trade Agreement (NAFTA) with Canada (Aaa stable) and Mexico (A3 stable), and has threatened substantial tariffs against China (A1 stable) following a US Trade Representative investigation. Despite the recent softening of the trade rhetoric between the US and China, risks of recurring trade tension remain as negotiations on specific measures proceed. ….
Source: Mark Zandi, Regional Financial Review, Volume 28 Number 7, March 2018
The decades-long effort by the U.S. to bring down tariffs and other trade barriers is over. The macroeconomic consequences of steel and aluminum tariffs would be small. But the economic impact of an all-out trade war would be serious, pushing the U.S. economy into recession…..
Source: Mark Zandi, Regional Financial Review, November 2017
Though the talks have hit a stumbling block, a new NAFTA agreement with only small changes is likely. Dissolving the pact would result in significant near-term economic costs and risk diminishing North America’s long-term economic growth prospects. This paper assesses the economic impact of a new NAFTA and the potential economic fallout if the negotiations and NAFTA fail.
Canadian negotiators are pushing the US to do away with anti-labor policies like “right to work.”
…. This paper focuses on one particular political consequence of a shrinking middle class. It contends that this was a key factor in Donald Trump becoming President of the United States. Then it argues that the policies promulgated by Trump will not help the US middle class but will exacerbate recent inequality trends. The paper concludes with some suggestions for reviving the middle class. ….
Trumponomics: causes and consequences – Part I
Source: Real-World Economics Review, Issue no. 78, March 22, 2017
Trump through a Polanyi lens: considering community well-being
Trump is Obama’s legacy. Will this break up the Democratic Party?
Causes and consequences of President Donald Trump
Explaining the rise of Donald Trump
Class and Trumponomics
David F. Ruccio
Trump`s bait and switch: job creation in the midst of welfare state sabotage
Pavlina R. Tcherneva
Trumponomics: causes and consequences – Part II
Source: Real-World Economics Review, Issue no. 79, March 30, 2017
Economic policy in the Trump Era
Major miscalculations: globalization, economic pain, social dislocation and the rise of Trump
Is Trump wrong on trade? A partial defense based on production and employment
Robert H. Wade
President Trump and free-trade
U.S. private capital accumulation and Trump`s economic program
Trump` s contradictions and the future of the Left
Trumponomics, firm governance and US prosperity
Robert R Locke
The Trump administration has outlined its plans to renegotiate the North American Free Trade Agreement (NAFTA). It says the US will seek a “much better” agreement that reduces the trade deficit between the US and its partners, Canada and Mexico. In response, the two countries released brief statements welcoming the proposal. They say they consider a possible renegotiation as a step towards modernising NAFTA to address the new realities and challenges of the 21st century.
Despite these good intentions and purported goodwill, the US objectives for a revised NAFTA are unachievable. Three problems with the US negotiating position reveal the limited understanding of Donald Trump, the US trade representative, Robert Lighthizer (who will lead the negotiations), and their advisers about NAFTA and its side agreements…..
On January 23, President Trump directed the United States Trade Representative (USTR) to withdraw the United States as a signatory to the Trans-Pacific Partnership (TPP) agreement; the acting USTR gave notification to that effect on January 30. The TPP is a proposed free trade agreement (FTA), signed by the United States and 11 Asia-Pacific countries on February 4, 2016. The agreement requires ratification by the member countries before it can become effective. Implementing legislation, the vehicle for U.S. ratification, was not submitted by the President or considered by Congress, in part due to the contentious debate over the agreement. Because the TPP had not taken effect, U.S. withdrawal does not immediately affect U.S. tariffs or other trade commitments. The United States also has existing FTAs with six of the TPP countries (Australia, Canada, Chile, Mexico, Peru, and Singapore), which this announcement does not affect.
TPP supporters argue that the withdrawal could damage U.S. negotiating credibility, undermine U.S. economic leadership in the region, hurt U.S. firms’ competitiveness abroad, and give China greater leverage to set regional trade rules. TPP opponents see the withdrawal as preventing greater U.S. import competition and potential job losses. Beyond the trade realm, some analysts also argue the withdrawal may signal declining U.S. engagement in the region and inability to assert leadership at a time when China’s rise and North Korea’s growing nuclear and missile capabilities are testing the U.S.-led rules system and challenging U.S. influence….
…. This report provides an overview of North American market-opening provisions prior to NAFTA, provisions of the agreement, economic effects, and policy considerations. ….
Source: Matthew C. Mahutga, Anthony Roberts, Ronald Kwon, Social Forces, Advance Articles, May 25, 2017
From the abstract:
Despite prominent and compelling theoretical arguments linking manufacturing imports from the global South to rising income inequality in the global North, the literature has produced decidedly mixed support for such arguments. We explain this mixed support by introducing intervening processes at the global and national levels. At the global level, evolving characteristics of global production networks (GPNs) amplify the effect of Southern imports. At the national level, wage coordination and welfare state generosity counteract the mechanisms by which Southern imports increase inequality, and thereby mitigate their effects. We conduct a time-series cross-section regression analyses of income inequality among eighteen advanced capitalist countries to test these propositions. Our analysis addresses alternative explanations, as well as validity threats related to model specification, sample composition, and measurement. We find substantial variation in the effect of Southern imports across global and national contexts. Southern imports have no systematic effect on income inequality until the magnitude of GPN activity surpasses its world-historical average, or in states with above-average levels of wage coordination and welfare state generosity. With counterfactual analyses, we show that Southern imports would have led to much different inequality trajectories in the North if there were fewer GPNs, and if the prevailing degrees of wage coordination and welfare state generosity were higher. The countervailing effects of GPNs and institutional context call for theories of inequality at the intersection of the global and the national, and raise important questions about distributional politics in the years to come.
The Trump administration on Thursday formally launched efforts to renegotiate the North American Free Trade Agreement with Mexico and Canada….
…..With the trade agreement now up in the air, we put together a guide to everything NAFTA — past, present, and future…..
Will NAFTA Renegotiation Produce TPP 2.0 and Intensify Damage? Or Fulfill Trump Promise of a ‘Much Better’ Deal for Working Americans? Maintaining Secretive Process With 500 Official Corporate Advisers Does Not Bode Well
Source: Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch, May 18, 2017
….Trump’s conflicts of interest and self-dealing opportunities with NAFTA renegotiation are not hypothetical; the sprawling Trump business empire has 14 Canadian and two Mexican investments. Some of Trump’s clothing line is made in Mexico. Trump won’t divest his business holdings or release his tax returns, so unless he reveals his full Mexican and Canadian business dealings, we won’t even know in whose interest these NAFTA talks are being conducted.
Trump’s broken promises on trade are piling up. Instead of punishing firms that offshore American jobs, he has awarded United Technologies 15 lucrative new government contracts even after they proceeded to offshore 1,200 of their 2,000 Indiana Carrier jobs. Instead of enacting the promised “get tough on China” trade policy, he flip-flopped on his pledge to declare China a currency manipulator on Day One and has done nothing to counter our massive $347 billion China trade deficit…..