International Trade

The Shortcomings in Trump’s Foreign Policy

Donald Trump has been a very unique presidential candidate, to say the least, and his uniqueness stretches all the way to his positions on foreign policy issues. His position on foreign policy involves: building a wall on US Mexico border and making Mexico pay for it, defeating ISIS, and establishing new immigration controls to boost American wages. At face value all of these ideas, except maybe building a giant wall on the southern border, may seem like good ideas. After all, boosting American wages would mean that Americans can buy more stuff, right? Well, this is actually not true.

Boosting American Incomes

Trump’s plan to boost American wages would actually hurt the US’ economy and cause American incomes to decline. The reason for this unexpected outcome is that limiting the possibilities of immigrants to gain employment means that lower wage positions will go to Americans. These Americans will demand higher pay than the formerly employed immigrants. Since business owners will be forced to pay employees higher wages, the cost of goods will increase. This means that all Americans will be paying higher prices for goods. As a result, Americans would have less discretionary income. This would lead to demand for higher cost services declining and could further lead to a decrease in employment among higher salaried careers.

Building a Wall

Trump’s proposal to build a wall along the Mexico border would be incredibly costly, costing around $15 billion to $25 billion. Mexico’s president, Enrique Peña Nieto, has also said that Mexico is not paying for a wall at the US border. Despite President Nieto’s statements, Trump continues to say that Mexico will pay for the wall. However, Trump actually has no way to effectively force Mexico to pay for the wall. Additionally, Trump’s plan does not take into account the many underground trafficking tunnels, which could be used to smuggle drugs and people. These underground tunnels are at times very sophisticated and large. For example, US law enforcement officers found a tunnel that ran all the way from Tijuana, Mexico to San Diego, California.

Defeating ISIS

Trump’s plan to defeat ISIS is even worse than his plans to “boost American wages” and stop illegal immigration. This is because his plan to defeat ISIS is largely non-existent. The only thing it says on Trump’s website about defeating ISIS is that Trump will:

Work with allies in the Middle East and “pursue aggressive joint and coalition military operations to crush and destroy ISIS, international cooperation to cutoff their funding, expand intelligence sharing, and cyberwarfare to disrupt and disable their propaganda and recruiting.”

The big problem here is that Trump’s statement is not very specific; he does not explain how he will do any of the things he outlines. Trump claims that he isn’t being specific because he doesn’t want the enemy to know his plan, but I’m not buying this. I think Trump isn’t being specific because he does not actually have a plan to defeat ISIS, which is understandable since Trump does not have much experience, if any, in developing international policy. His experience is in business, not international politics. Additionally, if Donald Trump actually had a plan, then one would think that he would at least give a little outline or sneak peak of his plan, but he has yet to do this.

Overall, when looking at foreign policy, Trump does not seem to be well suited for the position of President of the United States of America. His foreign policies would not only hurt the US economy, but they also seem to be vague and not well thought out.

Image Source: IB Times

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The Danger in Trump’s Trade Proposals

Are Donald Trump’s international trade proposals really that bad? Yes, yes they are. Let’s take a look at a few of Donald Trump’s international trade proposals.

  1. 20% tax on imports
  2. 15% tax for outsourcing jobs
  3. Donald Trump appointing himself as the United States Trade Representative

20% tax on imports
A 20% tax on imports is a tariff. Tariffs may sound like they would protect American jobs and industries, but tariffs are actually harmful. High tariffs decrease foreign competition and protect inefficient industries which leads to industries becoming even more inefficient. This means that tariffs basically bail out inefficient industries. This bail out is paid by Americans through the increased costs of goods and services. The increased costs of goods and services could lead to a decrease in the demand of goods which could cause people to lose their jobs.

15% tax for outsourcing jobs
A 15% tax on companies that outsource jobs may sound like a good idea. After all, it would help to ensure that people don’t lose their jobs to outsourcing. However, this tax would have effects similar to a tariff. It would promote inefficiency and keep prices high.

Donald Trump appointing himself as the United States Trade Representative
If Donald Trump became president, it would be a terrible idea for him to appoint himself as America’s trade representative. Besides him not having enough time to be the United States Trade Representative due to various presidential duties, Donald Trump does not have the expertise to be the United States Trade Representative. The current United States Trade Representative, Michael Froman, has extensive experience in international economics and public policy. Donald Trump on the other hand is a business man, he does not have much experience in international economics or public policy.

Image: Mr Donald Trump New Hampshire Town Hall on August 19th, 2015 at Pinkerton Academy in Derry, NH by Michael Vadon https://www.flickr.com/photos/80038275@N00/20724485306

The Trans-Pacific Partnership Agreement

The Trans-Pacific Partnership (TPP) Agreement has been at the center of much political disagreements. Some people claim that the TPP is harmful to the US while others disagree. The United States International Trade Commission (USITC) has prepared a report on the TPP. The report provides information about the TPP’s potential impact on the US’ economy and specific industries.

Overall, the USITC found that the TPP would positively effect the US economy and specific industries. However, this impact would be somewhat small. The USITC estimates that real annual American income would be .23% ($57.3 billion) higher due to the TPP. Real GDP would be higher by .15% ($42.7 billion) and employment would be .07% (128,000 full time jobs) higher. Several US industries will also experience positive gains. For example, the US poultry industry would experience an increase in the price competitiveness of exports. Also, the US dairy industry would experience slightly higher output (by 1.3%) if the TPP were to be adopted.

The USITC’s report can be found here.

 

Image: https://usitc.gov/