Facts and Flaws in Trump's trade protectionism

First of all I like to think of myself as politically agnostic. I try to evaluate each politician and each decision on a case by case basis because I believe that nobody should ever blindly or completely agree with any political party platform or politician. I like to look at both sides of any issue and try to develop an informed and unbiased viewpoint.

We all know of Trump's strong stances but I would like to dissect one small section only, his stance on trade. Globalization and trade is the way of the world now. In the past, societies members produced what they needed, but it didn't take long for trade to be necessary since it is much easier to specialize in select areas rather than to be an expert in everything. Think of an elderly woman knitting clothes all her life and a farmer working the fields switching roles, it would not be efficient.

As a country American is capable of producing what it needs, however resources can be better used specializing in certain areas. Sure America could produce clothing and stop importing from countries like Bangladesh, but labour standards, international wage standards and ethics aside, the fact is the US cannot produce at anywhere near the prices they can import. Not only that, but do they really want to be creating such low paying jobs? Sure Trump could slap a tax on these imports, but all that does is make the products more expensive for the consumers and maybe those poor underpaid workers in foreign countries get squeezed even more as the big businesses try to maintain their profit margins. US labour resources can be better used elsewhere.

Then there comes the key point that if the US takes a protectionist stance and begins trying to curb imports while maintaining exports, this will no doubt result in retaliation from other countries. This way of thinking is called mercantilism, the dominant idea in 1800's Britain before Adam Smith brought the idea of capitalism into popularity. The simple fact is if every country tries to export as much as possible and import as little as possible then there are limited buyers and too many sellers. It is simple economics, simple supply and demand, that the world learned around 200 years ago does not work.

Now bringing more technology and sustainable manufacturing jobs to America and repatriating foreign funds could definitely stimulate the economy if done properly. However, we are in a world where trade and globalization has improved our standard of living beyond anything imaginable to prior generations, so it would be a shame to take any steps backwards.

Day Trade Canada