MEMO Published April 7, 2016 • 16 minute read 50 Ways Trump Is Wrong on Trade

Gabe Horwitz Donald Trump is a businessman, a billionaire, and a Vice President for the Economic Program globetrotter with nancial interests currently in Turkey, @HorwitzGabe Panama, South Korea, Canada, Philippines, India, Uruguay, Jay Chittooran Brazil, Ireland, Scotland, and the United Arab Emirates, Policy Advisor, Economic 1 Program according to his website. So how could someone with that breadth of global experience be so wrong on trade?

Donald Trump is one of America’s loudest voices in opposition to trade generally and to the Trans-Pacic Partnership (TPP), which is his prerogative as a candidate for President. He has leveled bombastic accusations about TPP and other U.S. trade deals; of course, he levels bombastic accusations nearly every day on a host of issues.

Of course, the sheer size of TPP —nearly 40% of global GDP— calls for robust debate and analysis. Third Way supports TPP as a way to open U.S. markets, write the rules of commerce in Asia (instead of China), and dramatically increase Made in America exports to the world’s most important growing market. We see this agreement as an essential component of restoring the basic American bargain of economic growth that benets the middle class and those aspiring to join it. Others, including Trump, view TPP dierently, and that debate has been passionate.

But unlike most issue areas in this presidential race, Donald Trump has actually proposed a specic trade policy in place of TPP—a 45% tax on imports coming from China, a 35% tax on many imports from Mexico, and a 20% tax on imports from other countries. 2

“I would do a tax. And the tax, let me tell you what the “tax should be … the tax should be 45 percent [on Chinese imports].” 3 –Donald Trump, January 2016 ” It seemed to us that with this proposal, Trump departed the area of reasoned policy discussion and entered a land of scal fantasy. Then we looked at what others are saying about Trump’s tari plan. In an eort to be fair, we tried to nd academics, business leaders, and economists in favor of the plan. It wasn’t easy. Republican Congressman Chris Collins of New York said the taris would raise prices on consumer products up to 15%, but this would ultimately benet the economy because “the United States needs some level of ination.” 4 Ian Welsh, former managing director of the now-defunct leftwing blog Firedoglake, said that “what Trump wants to do is to use taris to return production to the United States.” 5 These are among the very few who think Trump’s proposed taris would be benecial.

What follows are 50 leading experts, publications, and outlets that have come out in opposition to Trump’s views on trade.

Their voices—from Baton Rouge to San Francisco, from liberal columnist Paul Krugman to Chamber of Commerce President Tom Donohue—debunk and rebuke Trump on trade. They warn of a stock market collapse, a new recession on par with the Great Recession, massive job losses, rampant ination, and a ballooning trade decit. North, south, east, west, left, right agree—protectionism is dangerous. Below we summarize the recent and growing consensus among leading publications, fact checkers, notable columnists, industry leaders and economic experts, and think tanks.

Leading Publications

1. Baton Rouge Advocate Editorial: Donald Trump’s trade policy would result in “stock markets around the world… in a free-fall and American trade partners around the world in a tizzy. The notion that both parties might draw back from good business deals with foreign trading partners ought to be a matter of real concern.” (March 23, 2016)

2. Bloomberg View Editorial: “An outright retreat from liberal trade would be far worse—and a retreat as dramatic as Trump's proposal would be disastrous. Imposing high taris (and coping with the barriers raised by other countries in retaliation) would involve huge disruptions in the short term, for both suppliers and workers. The smart case for free trade is the best answer to the new protectionism.” (March 28, 2016)

3. Crain’s Detroit Business Editorial: “Donald Trump has made free trade the fall guy in this year's presidential election. Tapping the angst and nancial insecurity of voters has catapulted him to the head of the Republican pack. But if you want to blame job losses on something or somebody, pick technology. (March 20, 2016) 4. Detroit News Editorial: “But taris, taxes and the ght against free trade would raise prices across the board on consumer goods, without boosting employment or incomes…as for the TPP, its passage is vital to maintaining America’s inuence in a region where China is increasingly asserting itself…But the protectionist policies being discussed on the campaign trail risk throwing America into recession. As a manufacturing state heavily dependent on the export of goods, Michigan can’t aord measures that choke o trade.” (March 9, 2016)

5. Los Angeles Times Editorial: “Globalization isn't a product of trade deals, it's a product of developing economies becoming more connected commercially to the developed world by technology and other forces. That's why the U.S. focus as it negotiates these pacts is shifting from reducing taris to other factors that aect the cost of doing business in a country. But to categorically oppose trade deals is to say that the U.S. shouldn't try to bring the rest of the world up to the labor, environmental and commercial standards that apply here. That's a losing strategy.” (March 10, 2016)

6. New Jersey Star-Ledger Editorial: “A sampling of [Trump’s] whoppers: Claiming that the United States has a ‘$500 billion a year trade decit with China’ (it doesn't). Trump also said the U.S. doesn't export anything to Japan (we exported $62 billion worth of goods last year), & that we don't win at trade (we had trade surpluses with a number of countries).” (March 21, 2016)

7. San Francisco Chronicle Editorial: “But the protectionist shouts from Democrat Bernie Sanders and Republican Donald Trump are hollow and shortsighted, nothing close to sensible economics….free trade remains a way to lift the economy.” (March 10, 2016) 8. USA Today Editorial: “Trade produces more aordable merchandise and more variety, a godsend for consumers struggling to make ends meet. It is also responsible for signicant amounts of employment: 11.7 million people in America work in export-related industries. And protectionist measures, such as the huge taris that Trump tosses around, would ignite trade wars that would do far more economic harm than good.” (March 10, 2016)

9. Wall Street Journal Editorial: “The best way to boost American exports is to remove trade barriers with new trade agreements. Mr. Trump claims that as President he would make smarter and ‘fairer’ trade deals. He could help persuade voters by showing that he knows more than nothing about foreign trade.” (March 11, 2016)

10. Washington Post Editorial: “His proposed tari on Chinese imports could spark a trade war and global depression.” (March 16, 2016)

11. Washington Post Editorial: “Blaming freer trade for the loss of manufacturing jobs fails to tell the much bigger story of economic transformation that has swept the world over the past several decades. [Free trade] pulls foreign trading partners out of poverty. It helps U.S. exporters, who account for an increasingly large share of American output. It enriches U.S. consumers, who get cheaper goods and greater selection.” (March 10, 2016)

Fact Checkers

1. Amy Sherman, PolitiFact: “However, Trump’s overall message here is misleading because he suggests that the size of the trade decit is proof that Mexico could pay for the wall. In reality, the trade decit has nothing to do with whether the Mexican government could aord to write the United States a check to build the wall. We rate this statement False.” (January 26, 2016) 2. Clayton Youngman, PolitiFact: “To Trump’s assertion that the trade deal was designed for China’s benet, experts say it’s actually the opposite…the TPP does allow the United States to shape trade practices in the Pacic before China can.” (November 12, 2015)

3. FactCheck.org: “Trump grossly exaggerated the U.S. trade decit with China, and falsely claimed that the U.S. runs a trade decit with ‘every country.’” (March 4, 2016)

4. Glenn Kessler, Washington Post: “Trump’s claims on trade, currency manipulation and manufacturing are either wrong or no longer valid.” (March 18, 2016)

5. Politico “Wrongometer”: “Donald Trump criticized the lack of rules on currency manipulation in the Trans Pacic Partnership trade deal. ‘They don't even discuss it in this trade agreement,’ he said. But the 12 countries involved in the TPP actually signed a separate ‘joint declaration’ to deter currency manipulation—not technically part of the deal, but released alongside the TPP.” (November 10, 2015)

Notable Columnists

1. David Ignatius, Washington Post: “Of the many dangerous trends in the 2016 election, the revolt against free trade that has captured both parties could do the most long-term damage. That’s because protectionism would undermine future growth of the U.S. economy and subvert the nation’s role as global leader.” (March 18, 2016)

2. Doyle McManus, Los Angeles Times: “[Trump] wants to slap taris on goods imported from China and Mexico, which would almost surely set o an expensive trade war.” (March 14, 2016) 3. Paul Krugman, New York Times: “And anyone ragging on about those past deals, like Mr. Trump or Mr. Sanders, should be asked what, exactly, he proposes doing now. Are they saying that we should rip up America’s international agreements? Have they thought about what that would do to our credibility and standing in the world?” (March 11, 2016)

4. Paula Dwyer, Bloomberg View: “Just about everything Donald Trump says about trade is wrong, but his use of trade-decit numbers is especially so…a trade decit isn't an actual loss of money, as Trump says, but a dollar gure attached to how much more we buy from China than China buys from us.” (March 23, 2016)

5. Robert Samuelson, Washington Post: “The campaign’s misleading rhetoric is dangerous if it leads the next president to start a trade war (Trump).” (March 20, 2016)

6. Stephen Henderson, Detroit Free Press: “Trump hinted he’d double-down on that protectionism by leveraging our trade decit with Mexico to force that country to pay for a wall he wants to erect along the southern border. It wouldn’t just start a trade war—it would beg a dangerous reordering of the hierarchy of moral and economic issues that swirl around immigration and trade.” (March 10, 2016)

7. Tom Friedman, New York Times: This trade deal that Trump wants is “the trade deal Obama actually struck. You don’t know that because Trump doesn’t know it himself...thank goodness we had a former community organizer negotiating for us.” (March 16, 2016)

Industry Leaders & Economic Experts 1. Barney Jopson, Financial Times: “Jim McNerney, a former top executive at Boeing, 3M and General Electric, said Mr. Trump's hostility to international trade posed a serious threat to US prosperity…global trade, he said, was ‘a critical part of this country's prosperity and the growth and wellbeing of not only our citizens but citizens around the world.’ Tom Donohue, head of the US Chamber of Commerce called Trump’s proposals ‘sort of stupid.’” (March 22, 2016)

2. Ben White, Politico: “It seems like economics is not really [Trump’s] highest priority. These are political stances. At a time when U.S. exports are on the decline as a result of the strong dollar, adding the threat of taris is going to add another negative impact on U.S. exports.” (January 11, 2016)

3. Binyamin Appelbaum, New York Times: “‘There’s nobody since Hoover who talked this way about trade.’” (March 10, 2016)

4. Binyamin Appelbaum, New York Times: “Trade ows make up a small part of America’s economic activity. The primary explanations for the stagnation of middle-class incomes are necessarily domestic. ‘[Trump and Sanders] are following in the footsteps of politicians of all stripes who have found it convenient to blame the boogeyman of unfair trade for domestic economic problems.’” (March 30, 2016)

5. Bob Davis, Wall Street Journal: “Trump’s 45% tari would trigger reverberations around the world…the taris would drive down U.S. merchandise imports by $383 billion, but U.S. exports would take a much bigger hit, declining $658 billion…and the trade decit would increase by about $275 billion. The dicult transition could cost the U.S. even more than the one million jobs are at risk.” (March 24, 2016) 6. David Lawder and Roberta Rampton, Reuters: “[Trump’s trade plan] would spark nancial market turmoil and possibly even a recession…” that would “likely result in a permanent annual reduction in U.S. national income of more than $100 billion, or 0.8 percent.” (March 24, 2016)

7. Don Lee, Los Angeles Times: “Slapping high taris would be catastrophic for a wide range of American businesses...we would be open to all sorts of retaliation, and that would likely trigger a trade war that would be devastating.” (March 7, 2016)

8. Economist Intelligence Unit Global Risk Forecasting Service: “In the event of a Trump victory, his hostile attitude to free trade, and alienation of Mexico and China in particular, could escalate rapidly into a trade war.” (March 16, 2016)

9. Everett Rosenfeld, CNBC: “[Taris]…would ‘tremendously’ hurt the poor by jacking up the prices on many of the products they most frequently use.’ ‘So many U.S. companies are deeply involved in global supply chains: I can't even imagine what that would look like with high taris’ & ‘the world would denitely fall into a recession.” (March 10, 2016)

10. Heather Long, CNN Money: “But business leaders and economists from both sides of the aisle warn Trump's idea to slap hefty fees on Chinese and Mexican imports would be disastrous for the economy. Experts warn his plan to ‘x’ trade deals could cause an economic war that leaves Americans even worse o.” (March 15, 2016) 11. Jim Tankersley, Washington Post: “U.S. economy would be 4.6 percent smaller by the end of 2019 if America levies taris on China and Mexico and those countries respond, compared to where it would be with no taris. It forecasts U.S. employment would be 7 million jobs lower than it would have been, and that the unemployment rate would hit 9.5 percent in the middle of 2019. The federal budget decit would grow to be 60 percent larger than it would have been.”(March 25, 2016)

12. Jonathan Soble and Keith Bradsher, New York Times: “It’s interesting that despite the two-decade stagnation of the Japanese economy, Trump is now reviving the idea of Japan as an economic rival robbing America of jobs.” (March 8, 2016)

13. Jude Webber, Financial Times: Blackrock CEO Larry Fink says that protectionism “’would put the global economy into a recession.’” (March 12, 2016)

14. Meg Whitman, CEO HP, CNN Money: “His plan to put on a 35% tari on goods imported would sink this company into a recession. It would penalize global companies that are trying to be competitive globally.” (March 4, 2016)

15. Nicole Sinclair, Yahoo! Finance: “[Former-NSA and CIA Director General Michael] Hayden said this rhetoric and discussion are worrisome. ‘It’s a tremendous danger. We are a very competitive society. We’re actually being fairly successful…because we are open to global trade. So when you talk about slopping on taris that look a bit like Smoot Hawley back in the '20s that everyone agrees deepened the Great Depression, it’s really scary stu.’” (March 18, 2016)

16. Paul Wiseman, Associated Press: “[Trump] probably would ignite a trade war that would raise prices for Americans and cause diplomatic havoc. Economists recall that the 1930 Smoot-Hawley legislation, which raised taris on imports, inamed trade tensions and worsened the Great Depression.” (March 13, 2016) 17. Richard Katz, Wall Street Journal: “Mr. Trump’s taris would amount to a tax on American companies and households equal to 1.5% of GDP. A hit of that size could cause a recession…while [Trump’s threats] would damage the U.S. economy, perhaps sending it into recession, that damage would be dwarfed by the havoc created among U.S. friends such as South Korea, Taiwan and Thailand.” (March 29, 2016)

18. Rosalind S. Helderman and Tom Hamburger, Washington Post: “Trump’s trade rhetoric is ‘deeply irresponsible’ because isolating the U.S. economy could devastate businesses and hurt consumers.” (March 13, 2016)

19. Tim Mullaney, MarketWatch: “‘It would cost Mexico a signicant amount, but it would cost us as well, a lot more than $10 billion, to get in a trade war with Mexico. It’s just wrong.’” (March 16, 2016)

20. Tom Donohue, President, U.S. Chamber of Commerce, Bloomberg: “[A 45% tari on goods from China] would mean they’d probably impeach Donald Trump when they gured out what they really meant. And–that’s overstatement. I’m just trying to make it very clear, if you double the price of something we’re buying from China, the citizens that go to Wal-Mart and Target and go to their stores and people that buy components– they’re going to pay for this.” (March 18, 2016)

Think Tanks

1. Barry Bosworth, Brookings Institution, NPR: “Republican presidents are strongly inuenced by business leaders and Democrats more by academic economists, but both groups are strong supporters of open trade in an increasingly globalized economy.” (March 20, 2016) 2. Bryan Riley, Heritage Foundation, The Hill: “Americans should reject the failed trade policies of Herbert Hoover and his modern protectionist successors, and instead embrace the pro-trade vision of FDR and Reagan.” (March 11, 2016)

3. Mark Perry, American Enterprise Institute: “The almost daily proposals to erect trade barriers with double-digit taris and the constant misinformed lamenting about America’s trade decit have brought ‘ignorant nonsense about economics’ to new levels.” (March 17, 2016)

4. Pedro da Costa, Peterson Institute for International Economics: “At the same time, those who say the United States has lost millions of manufacturing jobs because of NAFTA lack evidence. A closer look at US manufacturing employment data over time shows that the decline in factory jobs preceded NAFTA and was not accelerated by it. As extensive research points out…trade deals create jobs that are higher paying than the ones lost. But the net eect on employment is small.” (March 30, 2016)

5. Robert Lawrence, Harvard University Kennedy School of Government and Peterson Institute for International Economics, PBS: “Trump's taris would wreak havoc with global supply chains and force many companies to reduce employment. In addition, foreigners would undoubtedly retaliate against our exports as they would be entitled to do under our trade agreements. Think about what a trade war would do to investment and employment.” (March 8, 2016)

6. Scott Lincicome, Cato Institute and Duke University, The Federalist: “The economic pain wouldn’t stop with U.S. exporters because the Trump tari, just like any other consumption tax, would inevitably increase U.S. prices of everything…taris are regressive taxes that harm poor Americans far more than wealthy folks like Trump.” (January 20, 2016) 7. Thomas Wright, Brookings Institution, Financial Times: “A Trump administration would pose the greatest shock to international peace and stability since the 1930s. He also opposes every trade deal America has signed over the past 30 years. He wants to use taris and other protectionist measures to bludgeon other countries into accepting lopsided agreements that disproportionately benet the US. Under his presidency, the open global economy would slam shut.” (March 23, 2016)

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END NOTES

1. “The Trump Organization,” Accessed April 1, 2016. Available at: http://www.trump.com/

2. David Lawder and Roberta Rampton, “Trump's tari plan could boomerang, spark trade wars with China, Mexico,” Reuters, March 24, 2016. Accessed April 1, 2016. Available at: http://www.reuters.com/article/us-usa- election-trump-trade-idUSKCN0WQ0WG; See also Donald J. Trump, “Time to Get Tough: Making America #1 Again,” Regnery Publishing, Washington, DC, 2011, p 65. Print.

3. Maggie Haberman, “Donald Trump Says He Favors Big Taris on Chinese Exports,” New York Times, January 7, 2016. Accessed April 1, 2016. Available at: http://www.nytimes.com/politics/rst- draft/2016/01/07/donald-trump-says-he-favors-big- taris-on-chinese-exports/.

4. Chris Collins, Interview by Chuck Todd, MTP Daily, MSNBC, February 24, 2016. Accessed April 1, 2016. Available at: http://www.msnbc.com/mtp- daily/watch/trump-picks-up-rst-congressional- endorsement-630658627769. 5. Ian Welsh, “Trumponomics – How the Trump Economic Plan Will Work,” IanWelsh.Net, February 25, 2016. Accessed April 1, 2016. Available at: http://www.ianwelsh.net/trumponomics-how-the- trump-economic-plan-will-wor/